How to Diversify Your Portfolio With Short Term Bonds

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Short term bonds are basically talking about something that you are holding for stability and has essentially a zero correlation with whatever else is in your portfolio. You can switch in and out of these things as times change or your tax rate changes. Now getting to diversification, there is a big difference here between your short bonds and your long bonds. The purpose of long term bonds is diversification and in particular diversification from stock funds.

In this episode we answer emails from Wesley, Mark and a different Mark. And an errant comment from his Dude-ness, Alexi. We discuss how municipal bond funds might be used in risk-parity style portfolios and how not, a couple of interesting newer financial planning calculators and the planning process I actually use instead to account for liquidity issues, asset allocations in accumulation when options are limited and the ins and outs of preferred shares funds like PFF. And then we goof off. Again.

Links:

Correlation Matrix with Municipal Bond Fund: Asset Correlations (portfoliovisualizer.com)

ETF Research Center Financial Tool: ETF Research Center (etfrc.com)

Projection Labs Financial Tool: ProjectionLab - Simulate your financial future and plan for financial independence.

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