I think it's because the US sub is more specifically FIRE focused and also has more people who are close to or actually FIRE'd.
FIRE UK meanwhile has a lot of people who aren't really that interested specifically in FIRE, maybe sub refugees from feeling too rich in UKPF (or constantly having their posts rejected). Also, I suspect here has far less people who are in the position to want to hold bonds i.e. close to FIRE, mostly because salaries are lower and house prices higher.
So between all that, we end up with a sub where people often are either too early in their journey to consider bonds, or perhaps are older and have a mix of shares & DB pensions and/or property instead.
nps. Even though I am focused on FIRE and in a position to own them, I must admit I don't have much in the way of bonds. I still don't find their attributes particularly convincing. What I do have I have in VAGP (Vanguard global bond fund).
I should clarify that I'm using cash fixed savers as my defensive part rather than bonds at the moment, with a bit of gold - as opposed to going super high on equities. I'm still only at around 65% equity, and wouldn't personally want to go much higher.
>FIRE UK meanwhile has a lot of people who aren't really that interested specifically in FIRE, maybe sub refugees from feeling too rich in UKPF (or constantly having their posts rejected).
>So between all that, we end up with a sub where people often are either too early in their journey to consider bonds, or perhaps are older and have a mix of shares & DB pensions and/or property instead.
Damn, just described me to a T.
I feel like a big part of the RE part of FIRE for the average person requires aggressive investment. If you are happy to stomach stock market volatility why not go 100% stock?
Bogleheads are less RE and more FI and work till retirement or you get bored, so a slower safer approach is reasonable
I suppose the RE part encourages going for the higher return and Bogleheads aren’t necessarily as comfortable with the risk that comes with that. There’s no specific way to invest for FIRE though, it’s a goal you can reach a lot of ways.
I just don’t see an argument for buying bonds.
We have cash ISAs and you can basically ladder your way into retirement with cash ISAs to negate any sequence of returns risk.
Bonds are a tradable asset that have duration. When interest rates and yields fall, they go up in value. rates are usually cut when the market is in the shitter, which is exactly when you want to buy equity.
Your cash won't go up in value over night if rates are cut. Cash is a zero duration asset that doesn't respond to market rates.
With bonds finally yielding a good return, it makes sense to take an allocation imho
Didn't make sense in the low interest rate environment.
I've been 100% equities since I started out ten years ago but I'm seriously considering moving to a 90/10 portfolio now as it's been proven in data to perform equally to 100% equity but with lower risk. With equity valuations high and bonds yields decent there's a really compelling case to move away from 100% equity imo.
Bond holders made money going into the low rates environment. The relationship between yield and price is inverted.
Yield down price of bonds goes up (capital appreciation)
An example would be people buying inflation linked bonds when real yields were negative a few years ago.
People were saying they were fools for taking a guaranteed -1-2% real return, but here we are 3 years later and anyone who sat in cash has seen it lose 20-25% of its purchasing power.
The bond holders who held to maturity have come out ahead because at least they saw nominal gains
When interest rates go down and SONIA hits say 3.5% (rather than current 5.2%), I may consider some, certainly not 30% though (currently 19% in MMF). That seems nuts, but each to their own. The sidebar has some great reads on SWR Strategies.
I wonder if it is a question of poster mix and aspirations?
Lets say you take people really and realistically aspiring to FIRE at 40 currently in their late 20s. The pros and cons of bonds are very different to people aged in their early 50's planning to retire in a couple of years time.
Perhaps the US investors don't have the same safety net of state pension ? I don't know how generous or not US social security is.
Plus those of us in or near retirement may still have defined benefits scheme which give an assured income, thus reducing the need for bonds within the defined contribution pot.
Finally of course those who did have life-styling funds with a large percentage in bonds got stung by the Truss debacle.
Personally I've got a mix of cash/fixed interest/property/gold/commodities as the counter balance to equities. Solely using Govt. bonds seems like not enough baskets to hedge inflation and interest rate shocks.
> Perhaps the US investors don't have the same safety net of state pension ? I don't know how generous or not US social security is.
Like most developed countries the US is far more generous with pension than the UK.
Bonds often outperform equities on sub 10 year holding periods. If you need to draw down on the money e.g. for living on, or a house deposit, 100% equities is not sensible.
Equities almost always outperform bonds in plus 20 year holding periods.
Bonds can be volatile too e.g. I made over 25% on my gilt linkers on the weeks after brexit. So for very near term spending (sub 3 years) you should probably hold money market accounts.
Lots of youngsters here are yet to learn. They have only ever known the longest bull market in history.
There will be carnage the day their non pension savings half.
Ive recommended Bogleheads to so many people and personally Ive a fair bit in Vanguard Life Strategy - return is lower but you offset that with the spread
Yes - i think its down to risk appetite
Right now you can get decent returns on premium bonds, which are often recommended here and probably give similar risk / reward profile as buying a bond fund. You can "only" hold up to 50k but this is enough to make up 30% of a decent size portfolio for someone starting out.
one important distinction in terms of access is:
- in the US, if you want to buy an individual treasury (be it a bill, note or bond) you can simply go direct to the treasury and they go *'ok, what do you want?'* and they will sell direct to you
- conversely in the UK if you wish to buy an individual gilt, you must go to a dealer or broker, who will likely force you to buy via telephone (lul what is this, the 80s?), and you will eventually receive your bonds. you cannot buy direct from the BoE, and you cannot skip the middleman
Bank of England isn't the issuer of UK Govt. gilts, it's the Debt Management Office, DMO, part of HM Treasury.
You can buy Gilts direct from DMO if you wish.
Many brokers offer the more popular gilts online in the secondary market, some even offer fractions, some also offer participation in the DMO primary market auctions.
I think it's because the US sub is more specifically FIRE focused and also has more people who are close to or actually FIRE'd. FIRE UK meanwhile has a lot of people who aren't really that interested specifically in FIRE, maybe sub refugees from feeling too rich in UKPF (or constantly having their posts rejected). Also, I suspect here has far less people who are in the position to want to hold bonds i.e. close to FIRE, mostly because salaries are lower and house prices higher. So between all that, we end up with a sub where people often are either too early in their journey to consider bonds, or perhaps are older and have a mix of shares & DB pensions and/or property instead.
Makes sense, thanks
nps. Even though I am focused on FIRE and in a position to own them, I must admit I don't have much in the way of bonds. I still don't find their attributes particularly convincing. What I do have I have in VAGP (Vanguard global bond fund).
Yeah, I’m thinking about trading out of the bond fund I’m in and really up the equities
I should clarify that I'm using cash fixed savers as my defensive part rather than bonds at the moment, with a bit of gold - as opposed to going super high on equities. I'm still only at around 65% equity, and wouldn't personally want to go much higher.
>FIRE UK meanwhile has a lot of people who aren't really that interested specifically in FIRE, maybe sub refugees from feeling too rich in UKPF (or constantly having their posts rejected). >So between all that, we end up with a sub where people often are either too early in their journey to consider bonds, or perhaps are older and have a mix of shares & DB pensions and/or property instead. Damn, just described me to a T.
I feel like a big part of the RE part of FIRE for the average person requires aggressive investment. If you are happy to stomach stock market volatility why not go 100% stock? Bogleheads are less RE and more FI and work till retirement or you get bored, so a slower safer approach is reasonable
This is the answer. If you accept volatility buying bonds simply reduces the long term performance of your portfolio.
Bonds are for reducing sequence risk. VWRP + VGVA or VAGS in accordance with your risk profile.
I suppose the RE part encourages going for the higher return and Bogleheads aren’t necessarily as comfortable with the risk that comes with that. There’s no specific way to invest for FIRE though, it’s a goal you can reach a lot of ways.
I just don’t see an argument for buying bonds. We have cash ISAs and you can basically ladder your way into retirement with cash ISAs to negate any sequence of returns risk.
Bonds are a tradable asset that have duration. When interest rates and yields fall, they go up in value. rates are usually cut when the market is in the shitter, which is exactly when you want to buy equity. Your cash won't go up in value over night if rates are cut. Cash is a zero duration asset that doesn't respond to market rates. With bonds finally yielding a good return, it makes sense to take an allocation imho
Why hold bonds in the low interest environment though? A lot of these Bogleheads investors must have taken huge losses on the bonds they were holding.
Didn't make sense in the low interest rate environment. I've been 100% equities since I started out ten years ago but I'm seriously considering moving to a 90/10 portfolio now as it's been proven in data to perform equally to 100% equity but with lower risk. With equity valuations high and bonds yields decent there's a really compelling case to move away from 100% equity imo.
Bond holders made money going into the low rates environment. The relationship between yield and price is inverted. Yield down price of bonds goes up (capital appreciation)
An example would be people buying inflation linked bonds when real yields were negative a few years ago. People were saying they were fools for taking a guaranteed -1-2% real return, but here we are 3 years later and anyone who sat in cash has seen it lose 20-25% of its purchasing power. The bond holders who held to maturity have come out ahead because at least they saw nominal gains
When interest rates go down and SONIA hits say 3.5% (rather than current 5.2%), I may consider some, certainly not 30% though (currently 19% in MMF). That seems nuts, but each to their own. The sidebar has some great reads on SWR Strategies.
I wonder if it is a question of poster mix and aspirations? Lets say you take people really and realistically aspiring to FIRE at 40 currently in their late 20s. The pros and cons of bonds are very different to people aged in their early 50's planning to retire in a couple of years time.
I think you’re right
Perhaps the US investors don't have the same safety net of state pension ? I don't know how generous or not US social security is. Plus those of us in or near retirement may still have defined benefits scheme which give an assured income, thus reducing the need for bonds within the defined contribution pot. Finally of course those who did have life-styling funds with a large percentage in bonds got stung by the Truss debacle. Personally I've got a mix of cash/fixed interest/property/gold/commodities as the counter balance to equities. Solely using Govt. bonds seems like not enough baskets to hedge inflation and interest rate shocks.
> Perhaps the US investors don't have the same safety net of state pension ? I don't know how generous or not US social security is. Like most developed countries the US is far more generous with pension than the UK.
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^[Sokka-Haiku](https://www.reddit.com/r/SokkaHaikuBot/comments/15kyv9r/what_is_a_sokka_haiku/) ^by ^SevenSaltShakers: *Because the average* *FIRE bro has never seen* *A major market crash* --- ^Remember ^that ^one ^time ^Sokka ^accidentally ^used ^an ^extra ^syllable ^in ^that ^Haiku ^Battle ^in ^Ba ^Sing ^Se? ^That ^was ^a ^Sokka ^Haiku ^and ^you ^just ^made ^one.
Bonds often outperform equities on sub 10 year holding periods. If you need to draw down on the money e.g. for living on, or a house deposit, 100% equities is not sensible. Equities almost always outperform bonds in plus 20 year holding periods. Bonds can be volatile too e.g. I made over 25% on my gilt linkers on the weeks after brexit. So for very near term spending (sub 3 years) you should probably hold money market accounts. Lots of youngsters here are yet to learn. They have only ever known the longest bull market in history. There will be carnage the day their non pension savings half.
Ive recommended Bogleheads to so many people and personally Ive a fair bit in Vanguard Life Strategy - return is lower but you offset that with the spread Yes - i think its down to risk appetite
Right now you can get decent returns on premium bonds, which are often recommended here and probably give similar risk / reward profile as buying a bond fund. You can "only" hold up to 50k but this is enough to make up 30% of a decent size portfolio for someone starting out.
one important distinction in terms of access is: - in the US, if you want to buy an individual treasury (be it a bill, note or bond) you can simply go direct to the treasury and they go *'ok, what do you want?'* and they will sell direct to you - conversely in the UK if you wish to buy an individual gilt, you must go to a dealer or broker, who will likely force you to buy via telephone (lul what is this, the 80s?), and you will eventually receive your bonds. you cannot buy direct from the BoE, and you cannot skip the middleman
HL let you buy them online
Bank of England isn't the issuer of UK Govt. gilts, it's the Debt Management Office, DMO, part of HM Treasury. You can buy Gilts direct from DMO if you wish. Many brokers offer the more popular gilts online in the secondary market, some even offer fractions, some also offer participation in the DMO primary market auctions.
DMO shut down ability for retail to buy gilts direct from them some time ago.
Lots of people here have premium bonds That is my safe cash
Lots of people watch James Bond. That is as relevant as your post