This Marketwatch.com article suggests that young investors should increase the bond allocation in their portfolios to as much as 50%. While bonds have a place in every portfolio to reduce overall volatility, a 50% allocation to bonds might not be suitable in a long-term portfolio (as correctly pointed out in the article).
My asset allocation plan calls for 20-25% allocation to bonds in my portfolio. I’m fully aware of the fact that bonds have outperformed stocks for the past few years and future bond returns might be tepid. The main reason I want bonds in my portfolio is to reduce its overall volatility. Two bond ETFs I am considering are the iUnits iBond (TSX: XBB) and iG5 (TSX: XGV).
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