Why Bonds Stink for Long-Term Investors
If you are young and in reasonably good health (and by “young” I mean under age 65), then you would do well to ignore market volatility and bear markets. You would also do well to avoid bonds and “target date” mutual funds. Both are likely to hurt your long-term goals and your ability to keep pace with inflation. I believe inflation and taxes will only get worse. If that is true, then bonds are a lose-lose for the long-term.
Practicing What I Preach
The following images of recent account history for my ROTH and traditional IRAs help my reader see the results of this type of thinking. Don’t miss the reality of the bond portion. Negative returns are not a help to your goals.
Market vs. Wayne
Asset Allocation is light on bonds
Bonds are a better investment than cash. It is a less volatile way to earn a decent monthly income using bond ETFs.
Two Year Balance History
Remember: Even if you don’t get to spend all of your assets, have a will and make certain your heirs are prepared for managing what you give to them. They will need instruction, knowledge, understanding and wisdom!
I am 70 years old and have a long-term perspective. That perspective includes a view that real treasure is eternal, not temporal.
“Do not lay up for yourselves treasures on earth, where moth and rust destroy and where thieves break in and steal, but lay up for yourselves treasures in heaven, where neither moth nor rust destroys and where thieves do not break in and steal. For where your treasure is, there your heart will be also.” – Jesus in Matthew 6:19-21 ESV