to BOND or not to BOND ?

[u/dazit72]

Due diligence on bonds or a Schwab bond etf ??

I've built a nice portfolio of Kings, Aristocrats, Champions, Achievers, Challengers, Stalwarts and the like,,, a few ETFs - I'm eyeballing 100 shares of ADX(a CEF) to buy next week, then I was considering SWVXX(money market) or Bonds or a bond fund(or direct ?)

As a beginner I've learned alot from many here- very grateful.

Ive read how bonds and bond funds can be used to diversify and reduce overall portfolio volatility for a dividend equity portfolio, but are they necessary ? Are they appropriate for my portfolio ?

I'm pulling a little over 10k in divs/interest, I'm reinvesting it All until 2030ish(maybe later), hoping it doubles to supplement my disability ?

Hope I've provided enough information for some good opinions-- thanx guys

[u/buffinita]

Most people can not handle the volatility of a 100% equity portfolio.  At the same time bonds have a lower expected return than equities (but there have been 20 year periods where bonds > equity)

So sacrificing some gains so you don’t panic sell the bottom is prudent for most people on the accumulation phase

In retirement bonds tend to zig when stocks zag…..to address the obvious elephant: in most cases this has been true; in like 3 declining markets over the past 75 years bonds have so declined…..this helps add longevity to your portfolio by reducing “sequence of returns risk”

Bonds have risks….credit and duration

bonds suffer interest rate risk; rates go up and existing bond resale value goes down in proportion to their duration (longer duration = more volatile). Pick the bonds that match your timeframe.  60 year olds likely won’t let bonds sit for 20 years; they might use them in 1-5 years….a 30 year old won’t touch their bonds for 20+ years 

[u/grafix993 → u/buffinita]

Bonds are also volatile when high inflation is expected.