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.

Buy Bonds if You Like Poor Performance

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

Results for one year July 2020 to July 2021 Wayne’s IRA and ROTH IRA

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.

Bonds are a decent way to get a reward for idle cash. My allocation, however, is small.

Two Year Balance History

A balance value is a temporary number, but it helps one see a trend. Don’t overreact to market volatility.

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!

Full Disclosure

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