Are bonds worth buying as a way to help keep a balanced portfolio in retirement? You may have read in the news lately about negative yield bonds. One listener has, and he is concerned that if they aren’t paying much interest then maybe they aren’t worth buying. I’ll tell you my thoughts on bonds as a way to balance your portfolio in retirement. I also consider another listener’s question about home ownership in retirement. He wants to know if renting is a good idea for retirees. You may be surprised by my answer, so be sure to listen in.Are bonds still an important part of a balanced portfolio in #retirement? Click To Tweet
Outline of This Episode
- [3:15] What is the best housing option in retirement for someone that is not a homeowner already?
- [10:56] Are bonds still worth buying?
- [16:00] The portfolio immunization strategy might help
Is renting really a dirty word?
Here’s some financial advice that goes outside the norms of traditional planning. Are you ready for this bombshell?
. . . It’s okay to rent!
If you think you should spend a bit more to improve your quality of life then, that’s okay. Our culture thinks that renting is a dirty word, but sometimes it’s worth it. While it may be more expensive to rent rather than to buy, sometimes it’s worth easing your worries. Not everything that we spend our money on has to have a positive return. Letting someone else have the headaches of home ownership can ease your own worries.Is home ownership always the best option in #retirement? Click To Tweet
Does owning a home guarantee a return?
Don’t be surprised if home ownership is not the money-making opportunity that it has been in the past. Interest rates have been falling for years and they will eventually start heading back up. Every percentage tick up in interest rates means that someone needs to have a smaller mortgage. Don’t get hung up on the idea that you need home equity or that you need to make money on your home. We don’t have that idea surrounding other big-ticket items like cars and boats. We accept that these are depreciating assets. When considering whether to rent or buy in retirement, set aside your notions that you have to make money on your home.
Are bonds worth buying?
Bond yields are declining. The Fed threw us a curveball recently and lowered interest rates, so if bonds aren’t paying much interest, are they still worth buying? First off, you need to consider how you use bonds. Bonds are traditionally used for growth and income in retirement portfolios. On the growth side, they are an important part of a globally diversified portfolio. How do you feel about the income side though?Are bonds an important part of your #retirement portfolio? Click To Tweet
What about negative yields?
Negative yields sound pretty scary, don’t they? The United States is not currently experiencing negative yields so it shouldn’t make you worry too much. If they begin to become a problem here then we will revisit this topic. Listen in to hear about how you can use the portfolio immunization strategy by creating an income ladder with bonds in retirement.
Resources & People Mentioned
Connect with Benjamin Brandt
- Get the Retire-Ready Toolkit:https://retirementstartstodayradio.com/
- Follow Ben on Twitter:https://twitter.com/retiremeasap
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