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Actually the duration is a bit high on VBILX. I use Vanguard's muni/tax exempt version VWIUX, but the point is you want a bond index with a duration of around 4
by srj 11y ago
Actually the duration is a bit high on VBILX. I use Vanguard's muni/tax exempt version VWIUX, but the point is you want a bond index with a duration of around 4-5 years. Maybe I'm more conservative than most, but you don't want to risk a large drop on money you need that soon (look at the REIT losses in '08).
- j_lev 11y agolol I was defending your suggestion! To defend REITs, yes REITs lost money in 2008 but but you could also buy property cheaper in 2008/2009. If you're going to cherry pick data then take the case where property prices double in 2016. You would expect REITs to double too (not taking into account the rent that you'd be receiving in the mean time), and you'd still be able to buy your property in five years time. The same can't be said for uncorrelated assets like bonds/CDs/etc. They suck in highly-inflationary environments. Also thanks for assuming I was talking about leveraged products. I wasn't.