Why I Now Question Bond Tents as a Portfolio Protection Strategy

My analyses using #cFIREsim have left me in doubt about #BondTents. While there are some situations in which a heavy allocation toward bonds in the years surrounding a retirement date make sense, bond tents introduce a new risk: That diminished returns may prevent the portfolio from lasting as long as it needs to.

If there's one takeaway from the analyses (simulations) I present in this video, it's that we all need to thoroughly test our assumptions. I now believe bond tents may only provide adequate portfolio protection in a few situations. Now I'm more focused on safe withdrawal rates and dynamic spending strategies to mitigate sequence of returns risk.

What do you think of the bond tent concept? Please let us know in the comments.

You may find these videos helpful:

Getting Started with cFIREsim:

Example of Sequence of Returns Risk:

Reducing Sequence of Returns Risk:

Dynamic spending in retirement videos:

You may also appreciate the Safe Withdrawal Rate Series on Early Retirement Now (BigERN's blog):

In light of what I've now learned about bond tents through cFIREsim analyses, I clearly need to revisit BigERN's Safe Withdrawal Series!

Check out the Multicollinearity Channel's Playlist for Strategies for Protecting an Investment Portfolio:

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