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Larry and Rick have very different views on the fixed income portfolio. Larry's view is that the fixed portion should have minimum risk; therefore, he recommends short-term bonds and TIPS. Rick states that diversification is as important in the fixed portion of the portfolio as it is in the equity portion. Rick suggests a mixture of various types of fixed investments. My understanding of the difference follows: As I understand Larry's position, risk/reward is set with the initial split of fixed and equity. Risk tolerance, etc. is adjusted in the split - if you want more risk/reward, increase the equity portion. As I understand Larry's views, the fixed portion is not the place for adding risk so his recommendation is low risk short-term bonds and TIPS. As I understand Rick's position, risk/reward should be considered in both fixed and equity so that a portion of the risk/reward is through the total allocation to equities, and a portion is in the mix of investments in the fixed portion. In theory, it may be possible to have the same level of risk/reward using either Larry's or Rick's approach. Larry's portfolio would have a higher allocation to equities with a low-risk fixed portfolio, whereas Rick's approach would be to split the total risk/reward between equity and fixed. Two Questions: 1. Have I correctly summarized the differences? If not, what is the correct comparison of the two approaches. 2. Views as to which approach is better and why? John Originally posted in thread: 27164

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