Rethinking this bond allocation should match your age formula + MORE Sep 23rd

This GIC rate is offered by Outlook Financial and was updated on 2013-09-16. Click on the link above to get more details or apply online.

This GIC rate is offered by Outlook Financial and was updated on 2013-09-16. Click on the link above to get more details or apply online.

With eye on long-term growth and not quarterly earnings, Fairfax CEO unlikely to bet his company on any one project or acquisition

The ProvinceBlackBerry to be sold to group led by Fairfax FinancialCBC.caBlackBerry's new raft of handsets released earlier this year, including the Q10, above, did not sell as well as the financially troubled company had hoped they would and it was forced to undergo restructuring and start looking for potential buyers.BlackBerry bargain? A value investor meets his matchThe Globe and MailBlackBerry takeover gives firm 'another chance at life'Toronto StarBlackBerry strikes a US$4.7-billion deal with Fairfax that's far from certainMontreal GazetteCanada.com -Reuters Canada -Bloombergall 413 news articles »

David Swensen’s book Unconventional Success mentioned that investors should construct a portfolio with monies allocated to the core asset classes below, keeping a bias towards equities:

30% Domestic Equity (VTI)
15% Foreign Developed Equity (VEA)
5% Emerging Markets (VWO)
20% REITs (Real Estate Investment Trusts) (VNQ)
15% U.S. Treasury Bonds (SHY)
15% TIPS (Treasury Inflation Protection Securities)

Add up bonds and treasuries and that’s 30% fixed income folks.  I actually disagreed with David Swensen’s model here.
Many financial experts including a famous one, John Bogle, have stated as you age you should consider this rule of thumb:  ”roughly your age in bonds”.  So, that means if you’re 45 today then roughly 45% of your portfolio should be in high-quality bonds.  Although Mr. Bogle has described this idea as “a crude starting point” it remains a rule of thumb for many investors.
Here’s my (revised) desired allocation:

60% equities (now includes up to 30% foreign assets)
10% REITs (mostly domestic REITs)
30% bonds (comprised of individual bond ETFs…read on for revised thinking below)

I used to hold many bonds in my individual portfolio using bond ETFs but I’ve significantly reduced my bond holdings across registered accounts over the last couple of years…