I have a 401k-type retirement account that can be invested in various funds. 64% is in stock funds, 29% in a short-term government bond fund, and 7% in a bond fund that consists of U.S. investment grade bonds (30% corporate bonds and 70% U.S. bonds of all maturities). I'm about 5 years from retirement and possibly drawing on this account.

The bond fund has been a slow but steady earner, outpacing the short-term bond fund, for decades, but in the last couple of years it has suffered small losses due to interest rate increases and other factors. The short-term government bond fund has at the same time been doing considerably better than usual because of the interest rate hikes.

I've stopped allocating new contributions to the bond fund, but I'm wondering if I should also transfer its balance to/among the other funds. If the interest rate situation changes so that corporate bonds start to gain value, I can move back in pretty easily.

I've never tried to time the market or even transferred any funds within this account. I just allocate contributions to keep the overall stock/bond mix where I want it, and it has been great. But this seems like a time to maybe move some money out of the bond fund.

What would you recommend?

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Posted by slackster

Houston

Member since Mar 2009

85420 posts

Posted on 1/5/24 at 8:49 am to Twenty 49

Bond funds should be down over the last couple years, so that’s not surprising.

Idk what your options are, but selling a fund because it’s been going down is kind of the antithesis of investing. There needs to be a better reason than past performance since you’re basically driving in the rear view mirror with that approach.

This post was edited on 1/5/24 at 8:50 am

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Posted by PlanoPrivateer

Frisco, TX

Member since Jan 2004

2811 posts

Posted on 1/5/24 at 8:55 am to Twenty 49

I wouldn't move any out of the bond fund. Your return has already suffered as interest rates rose. Enjoy the higher current rate and if interest rates go down the fund value will increase.

My retirement accounts are about 40% bonds. I'll just stay the course.

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Posted by TJack

Member since Dec 2018

1459 posts

Posted on 1/6/24 at 7:01 am to Twenty 49

I’ve been getting out of bonds for the past year. Mostly past fall during the dip. If I can get a percent or 2 on a dip then it’s outperformed the bonds. I’m at 10% bonds. Will prob get totally out by years end. Not investing anymore in bonds either. I have a pension for fixed income.

This post was edited on 1/6/24 at 7:04 am

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Posted by KWL85

Member since Mar 2023

1219 posts

Posted on 1/6/24 at 8:12 am to Twenty 49

I am semi-retired with about 20% bonds, and am not changing my mix yet. Bonds returns have been terrible the psst couple of years, but staying the course.

Fyi, I have always been heavier in stocks than traditional advice.

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