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SC Wisconsin | I'm a bogglehead myself, and had the exact same questions you do. I really struggled with the fact that since yields are so low and have no where to go but up, you are basically stepping onto the train tracks in front of a train. You just don't know when it's going to hit you. 1 yr, 5 yrs, never?
LIke someone else said, shorter durations and owning actual bonds may be one solution. At least with a physical bond you don't lose principal if you hold to maturity. Can't say that for a bond fund.
FWIW - I'm using my age - 10 for my bond allocation. I also have 1/4 of my bonds in TIPS.
Edited by gmoney 7/11/2011 10:11
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Should a person go to bonds. Sorry fixed.
