Bonds and Such (Four Pillars of Investing)

[IdealFugacity]

Is there a reason to have different bond exposure than VMMXX (Vanguard Money Market), such as the Short Term Bond Index? I will most likely be using VMMXX as my "Emergency Savings" vehicle, in a taxable account.

I'm in the last few dozen pages of The Four Pillars of Investing (Got it from the library. Will be asking for it as a graduation gift so I can keep a copy on my shelf forever.) As i will be just starting out, I think it's going to take me a few years to be properly diversified in terms of Stock/Bond mix, let alone diversify within all these bond classes he discusses!

One thing I learned from this book was managing ALL of your assets as one portfolio. A very valuable lesson which, up till this morning, I had been very specifically AVOIDING, instead planning a "possible-house-buying" asset allocation, an "emergency fund", and "retirement", now all of which I will be keeping as one large portfolio.

This actually makes life easier, as I had previously thought I would have to build an emergency fund from bonds, savings, etc, and THEN diversify into bonds/stock mix. 6 months expenses will probably be a very substantial portion of my assets anyway.

Another question; savings accounts yielding 4-5% will count as part of the "bonds" allocation according to Bernstein's philosophy, correct? Now I don't feel as if it is too conservative to start out with a 60/40 stock/bond mix until i receive a permanent position after the rotational program, whereas yesterday I was imagining 80/20!

[IdealFugacity]

Ah, a few pages later I find that he recommends the Prime Money Market Reserves for this very purpose. : )

[maxtower]

I wouldn't buy any bonds at all. Short term bonds aren't yielding as high as those high yield online savings accounts where you can get 5%+ right now with no risk to principal. Just keep that portion of your portfolio in a savings account.
Long term bonds are generally a bad idea with rates being so near historical lows.