Just about every “expert” financial adviser will want you to own bonds as a portion of your investment portfolio. They do this to give you a false sense of security in turbulent or volatile markets. It is a false sense of security because bonds are not as safe as you might be led to believe. I believe having more than 5% of your total investments in bonds, bond mutual funds or bond ETF’s is not wise if you are less than 65 years old. I am 67 years old and have about 2.6% in bonds, 11% in international stocks, 70% in US stocks and 14% in “alternatives” like real estate. My largest real estate investment is Realty Income Corp (O). How do I know this?
I use Personal Capital, which has a free web site for high-level analysis of your investments. Every week I get an email that tells me how I am doing as compared with the S&P 500 index, foreign investments and US Bonds. Note that bond investors are not gaining ground this year, they are losing ground. I can also sign on to the Personal Capital web site and review my portfolio by asset classes.
Foreign investments can also be quite tricky. I prefer to focus on companies in the United States, but I do have some international investments in Canada, Asia and Europe. The truth is, many of the large cap companies in the USA are also international investments. Just about every country has Apple, McDonald’s and Ford products. While I have a heavy concentration of Canada stocks, I don’t think every investor needs to do that. Buy simple investments like these ETFs: ITOT, VOO and VTI, if you want exposure to the market without having to pick individual investments.
Personal Capital: https://share.personalcapital.com/x/IDlkO0
Morningstar Indexes: http://news.morningstar.com/index/indexReturn.html