Should I buy bond?

Right now most of my assets are in stocks, real estate, and cash. I am considering diversifying into bonds, but it just does not look that attractive to me.

The advantages of bond is that it is fix income. Usually you get pay out twice a year. Also bond is a different asset class from stocks. Unlike real estate which tend to move along with the stock market. Therefore it is a good form of diversification from the stock market. Currently there are 2 types of bond that I am considering. Municipal and treasury bond. Municipal bond has the advantage of giving tax free yield. Treasury bond because it is one of the safest instrument.

I am not that excited about bonds because two other investments seem to provided better return. I can get 5-7% return in peer to peer lending. Albeit with higher risk. Also P2P lending is less liquid than bond. Alternatively I can just stick with dividend yielding stocks which pays 2%. Not too shabby when compared to the treasury bond return. Given I still have steady income and have a long investment horizon, my stocks will ultimately out perform my bond return.

For now I am going to focus on stocks and P2P lending. I like to explore some high return dividend stocks and corporate bonds, but will not jump into them yet.

Captial Deployment into a Downward Stock Market

Currently I have $100,000 of my SEP-IRA sitting in the money market. Yes, yes, I hesitated to dollar cost average all my IRA money that's why I have the excess fund. In reality I missed out on the big market up turn with all that money sitting on the sideline. No point in regretting. All I can do now is to devise a strategy to get back to full investment. I am 44 y/o. I still have a 21 year time line so logically I should be fully invested.

First of all I have to credit Financial Samurai for getting me to think about this subject. I am employing his idea of investing in 5 tranches during market downturn.

Here's my plan to invest $100,000 based on the prediction that the market may drop 20% from peak

S&P 500 drop 4% from peak (2044) - Invest $15,000
S&P 500 drop 8% from peak (1959) - Invest $20,000

SP500 4% drop (2044) – 15,000
SP500 8% drop (1959) – 20,000
SP500 12% drop (1874) – 30,000
SP500 16% drop (1789) – 20,000
SP500 20% drop (1704) – 15,000 - See more at: http://www.financialsamurai.com/develop-an-investing-game-plan-for-the-stock-market/#comments

S&P 500 drop 12% from peak (1874) - Invest $30,000

SP500 4% drop (2044) – 15,000
SP500 8% drop (1959) – 20,000
SP500 12% drop (1874) – 30,000
SP500 16% drop (1789) – 20,000
SP500 20% drop (1704) – 15,000 - See more at: http://www.financialsamurai.com/develop-an-investing-game-plan-for-the-stock-market/#comments

S&P 500 drop 16% from peak (1789) - Invest $20,000
S&P 500 drop 20% from peak (1704) - Invest $15,000

More than 20%drop I will look up excess non IRA money to invest. Or may the country is at war, and it's time to find shelter in the mountains.

SP500 4% drop (2044) – 15,000
SP500 8% drop (1959) – 20,000
SP500 12% drop (1874) – 30,000
SP500 16% drop (1789) – 20,000
SP500 20% drop (1704) – 15,000 - See more at: http://www.financialsamurai.com/develop-an-investing-game-plan-for-the-stock-market/#comments

SP500 4% drop (2044) – 15,000
SP500 8% drop (1959) – 20,000
SP500 12% drop (1874) – 30,000
SP500 16% drop (1789) – 20,000
SP500 20% drop (1704) – 15,000 - See more at: http://www.financialsamurai.com/develop-an-investing-game-plan-for-the-stock-market/#comments

SP500 4% drop (2044) – 15,000
SP500 8% drop (1959) – 20,000
SP500 12% drop (1874) – 30,000
SP500 16% drop (1789) – 20,000
SP500 20% drop (1704) – 15,000 - See more at: http://www.financialsamurai.com/develop-an-investing-game-plan-for-the-stock-market/#commentsS&P 500 drop 4% from peak (1704) - Invest $15,000

SP500 4% drop (2044) – 15,000
SP500 8% drop (1959) – 20,000
SP500 12% drop (1874) – 30,000
SP500 16% drop (1789) – 20,000
SP500 20% drop (1704) – 15,000 - See more at: http://www.financialsamurai.com/develop-an-investing-game-plan-for-the-stock-market/#comments

SP500 4% drop (2044) – 15,000
SP500 8% drop (1959) – 20,000
SP500 12% drop (1874) – 30,000
SP500 16% drop (1789) – 20,000
SP500 20% drop (1704) – 15,000 - See more at: http://www.financialsamurai.com/develop-an-investing-game-plan-for-the-stock-market/comment-page-1/#comment-258305