Q: I notice that you are getting a lot of questions regarding fixed income in a portfolio. Yesterday, for instance, someone asked about using utilities and other dividend paying stocks as a substitute for fixed income. I think the sense of the question was not really that dividend paying stocks are actually a substitute for bonds, but that under the current environment, it might be a viable option. Today, Ron asked about fixed income as and you responded that the Money Saver portfolio has a 20 per cent allocation to fixed income. I have sometimes seen 30 percent mentionned here as a reasonable amount.
I am not sure quite where to go with this, but I know that I am a little bit like a deer in the headlights regarding fixed income at this time, and I believe others are, as well. I don<t understand that asset very well. But, it seems counter intuitive to buy something that everyone says seems to have a high likehood of losing you money in the current or near future economic environment.
And even the amounts mentionned seem not to do what you would like them to do. What I mean is this: Fixed income, it seems to me, is meant to make the ride easier. You don<t go too far down, when you go down. And if there is a long term market crash, you protect some of your money. But, I am not sure how happy I would be if, say, our of a portfolio of one million, I managed to protect 200,000, or 20 percent; or even 300,000 at 30 percent. But, when you start getting to 40 or 50 percent, you wonder whether, again under the current environment, you are not being a little foolish in alloting this much to fixed income.
As I say, I am not sure where to go with all of this. But, it is a concern that I am coming to believe many here, as well as myself share. Possibly an article focused on this subject ands with explanations on the pros and cons of the various vehicles available might be an idea. I know that much depends upon the individual's situation and risk profile but the current economic situation is making it a little more problematic, I think.
I know that your work here is principally Canadian stocks but I thought I would express this anyway. So, please publish and answewr or not at your discretion.
thanks once again
I am not sure quite where to go with this, but I know that I am a little bit like a deer in the headlights regarding fixed income at this time, and I believe others are, as well. I don<t understand that asset very well. But, it seems counter intuitive to buy something that everyone says seems to have a high likehood of losing you money in the current or near future economic environment.
And even the amounts mentionned seem not to do what you would like them to do. What I mean is this: Fixed income, it seems to me, is meant to make the ride easier. You don<t go too far down, when you go down. And if there is a long term market crash, you protect some of your money. But, I am not sure how happy I would be if, say, our of a portfolio of one million, I managed to protect 200,000, or 20 percent; or even 300,000 at 30 percent. But, when you start getting to 40 or 50 percent, you wonder whether, again under the current environment, you are not being a little foolish in alloting this much to fixed income.
As I say, I am not sure where to go with all of this. But, it is a concern that I am coming to believe many here, as well as myself share. Possibly an article focused on this subject ands with explanations on the pros and cons of the various vehicles available might be an idea. I know that much depends upon the individual's situation and risk profile but the current economic situation is making it a little more problematic, I think.
I know that your work here is principally Canadian stocks but I thought I would express this anyway. So, please publish and answewr or not at your discretion.
thanks once again
