With cash paying higher yields than most bonds, retirees have started to ask if they should get rid of bonds. Here's one such email: Since bond funds (BND) have done nothing the last ten years, what would be your thoughts on someone (retired) setting 3 years worth of living expenses aside (cash, CD’S, MM, etc.) and investing the remainder in equity index funds." In this video I'll explain why bonds are a better, long-term investment than cash, particularly for those in retirement. Join the newsletter: ———————————— Video Resources ———————————— BND: Best Savings Accounts: U.S. Gov't Bond Yields: Real Yields: ———————————— Investing Tools ———————————— My Book (Retire Before Mom and Dad): Personal Capital (Investment Tracking, retirement planning): New Retirement (Retirement Planner): Stock Rover: M1 Finance $30 Bonus (IRA & Taxable Accounts): ———————————— Credit Cards & Banks ———————————— My Favorite Credit Cards: My Favorite Online Banks: ———————————— Popular Videos ———————————— 1️⃣ How to Create a 3-Fund Portfolio: 2️⃣ How I Manage 28 Accounts in One App: 3️⃣ 7-Step Financial Checkup: #cash #bonds #robberger ABOUT ME While still working as a trial attorney in the securities field, I started writing about personal finance and investing In 2007. In 2013 I started the Doughroller Money Podcast, which has been downloaded millions of times. Today I'm the Deputy Editor of Forbes Advisor, managing a growing team of editors and writers that produce content to help readers make the most of their money. I'm also the author of Retire Before Mom and Dad--The Simple Numbers Behind a Lifetime of Financial Freedom ( LET'S CONNECT Youtube: Facebook: Twitter: DISCLAIMER: I am not a financial adviser. These videos are for educational purposes only. Investing of any kind involves risk. Your investment and other financial decisions are solely your responsibility. It is imperative that you conduct your own research and seek professional advice as necessary. I am merely sharing my opinions. AFFILIATE DISCLOSURE: Some of the links on this channel are affiliate links, meaning at no cost to you I earn a commission if you click through and make a purchase and/or subscribe. However, I only recommend products or services that (1) I believe in and (2) would recommend to my own mom....(read more)
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Cash vs Bonds in Retirement: Weighing Your Options for Financial Security Planning for retirement involves making many crucial financial decisions, among which is determining the ideal mix of cash and bonds in your retirement portfolio. Both cash and bonds have their own benefits and drawbacks, and understanding the differences can help you navigate the path to a secure retirement. Cash, as the name suggests, includes any liquid assets you hold, such as savings accounts, checking accounts, money market accounts, and certificates of deposit. Bonds, on the other hand, are fixed-income securities that represent a loan made by an investor to a borrower, typically a corporation or government entity. They offer fixed interest payments over a specified period, and the principal is repaid at maturity. Before deciding how to allocate your retirement funds between cash and bonds, it is crucial to consider a few key factors. 1. Risk tolerance: Cash is considered less risky as it does not fluctuate in value, making it an ideal option for individuals who prioritize security and are risk-averse. On the other hand, bonds can be subject to price volatility and changes in interest rates. 2. Income needs: Assessing your income needs during retirement is crucial for proper financial planning. Cash holdings are readily accessible, allowing you to withdraw money as needed. Bonds provide a regular fixed income stream, which can be particularly beneficial for retirees who require predictable income to cover living expenses. 3. Inflation protection: Inflation erodes the purchasing power of your savings over time. While cash does not offer protection against inflation, bonds may provide a hedge. Treasury Inflation-Protected Securities (TIPS) are designed to maintain the value of the principal and adjust the interest payments based on inflation. 4. Diversification: Diversifying your investment portfolio is fundamental for mitigating risk. Allocating a portion of your retirement funds to bonds can provide diversification benefits, as bonds tend to perform differently compared to cash. This can help offset potential losses during market downturns and preserve your capital. Once you have considered these factors, striking the right balance between cash and bonds in your retirement portfolio is crucial. For retirement emergency funds or short-term expenses, maintaining a portion of your savings in cash is wise. Experts recommend keeping at least six months' worth of living expenses readily available in cash to cover unforeseen expenses and provide peace of mind. Regarding bond allocation, it is essential to consider your age, investment goals, and risk tolerance. A common rule of thumb is to subtract your age from 100 to estimate the percentage you should allocate to bonds. For instance, if you are 60 years old, around 40% of your retirement portfolio could be allocated to bonds. However, this is a general guideline, and individual circumstances should be taken into account. Lastly, it is crucial to review and adjust your cash and bond allocation periodically. As you progress through retirement, your investment objectives may change, and rebalancing your portfolio will ensure that it aligns with your new goals and risk tolerance. In conclusion, determining the ideal mix of cash and bonds in your retirement portfolio can be a complex decision. Balancing the need for liquidity, income, inflation protection, and diversification is crucial for achieving long-term financial security. By carefully evaluating your circumstances and consulting with a financial advisor, you can create a retirement portfolio that supports your unique needs and goals. https://inflationprotection.org/comparing-cash-and-bonds-for-retirement-planning/?feed_id=109614&_unique_id=64920c5454696 #Inflation #Retirement #GoldIRA #Wealth #Investing #Bonds #cash #cashvsbonds #fixedincomeinretirement #TIPSBonds #Bonds #cash #cashvsbonds #fixedincomeinretirement
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