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Bonds only give you certainty to the extent that inflation remains certain. Stocks generally rise with inflation, whereas bonds continue paying out the same no
by randerson 4mo ago
Bonds only give you certainty to the extent that inflation remains certain.
Stocks generally rise with inflation, whereas bonds continue paying out the same nominal amount, which buys you less over time.
As a retiree I'm 50/45/5 in stocks/bonds/cash, having opted for a conservative portfolio. The stocks are the only reason I haven't lost buying power. But the bonds have performed so poorly that I've barely kept up with inflation despite the amazing bull run in stocks.
- marticode 4mo agoAre we talking about bonds or government bonds here? The former will beat inflations assuming you don't just buy AAA rated ones. Investment grade perpetual bonds in US dollars yield over 6.5% on a Yield-to-call basis.
- riffraff 4mo agoWhich perpetual bonds yield 6.5% on a UTC basis?
- kgwgk 4mo agoYou may not have heard of TIPS (Treasury Inflation-Protected Securities) but they give you certainty even if inflation is uncertain. Currently you get 2.75% yield in real terms for the 30 year maturity: https://www.cnbc.com/quotes/US30YTIP https://www.cnbc.com/quotes/US30YTIP
- Marazan 4mo agoThat's why you buy inflation linked bonds
- throwaway2037 4mo agoWow, I am surprised that you think 50% in stocks as a retiree is a "conservative portfolio".