Reasons to Use Bonds for Retirement

Forbes recently published a focused piece summarizing the top reasons to use bonds for investing. Here are those reasons, in no particular order, and my comments as they relate to using TIPS and I-Bonds for retirement income security:

1.  Preservation of Principal. This is definitely number one on the list for retirement planning. Moreover, you cannot get any more secure than government-backed TIPS and I-Bonds.

2.  Saving. I have to agree with this one as well although purchasing TIPS and I-Bonds even right before retirement can be valuable to provide income 10-20 years down the road.

3.  Managing Interest Rate Risk. This is not important for bonds in a Failsafe Retirement Income Plan. What is important is managing inflation risk which TIPS and I-Bonds do but Forbes doesn’t mention.

4.  Diversification. I agree with this although not for the same reasons proposed by Forbes. Using TIPS and I-Bonds to meet essential retirement income needs gives you the safety and freedom to diversify and take risks with your other investments.

5.  Expense Matching. This means using income from bonds to match up with known future expenses. That’s exactly what a retirement income fund does.

6.  Long Term Planning. Forbes doesn’t mention long-term retirement planning but what could be more important for the individual bond owner?

As a final note, compare these uses of bonds with comparable uses of equities. Game over.

One thought on “Reasons to Use Bonds for Retirement

  1. Wall Street and stocks are highly unstable. The gambling is high and the risks are very high, and we the consumer will loose. Wall Street is a house built on quicksand, and it will sink again, soon, and will continue the fear of Wall Street as the globalists, those who don’t really care about America anymore try to make a killing for themselves at the expense of American citizens who have been brainwashed into believing that stocks, ETF’s, and other high risk investments are the only way to go. Bonds are mentioned very little except to scare people into believing that they could loose more through bonds than through participating in the stock markets.

    Most people have neither the money or the education to safely participate in very high risk investments and gambling schemes, and thus with the little money many people have they should stay away from these unsafe risks, and do a lot more investing in bonds in general, especially when a person is near (give or take a few years) retirement age (maximum) income age for Social Security.

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