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Bonds

title: Shouldn’t I be invested in some bonds? description: [AFW S.12.24] Securities Objection #24 published: true date: 2026-06-30T08:09:06.713Z tags: editor: markdown dateCreated: 2021-05-30T18:29:24.862Z

"Bonds promoted as offering risk-free returns are now priced to deliver return-free risk.” —Shelby Cullom Davis (1909-1994)

“Overwhelmingly, for people that can invest over times, equities are the best place to put their money. Bonds might be the worst place to put their money - they are paying very, very little, and they're denominated in a currency that will decline in value.” ―Warren Buffett

“Not only have fixed-income returns lagged substantially behind those on equities, but because of the uncertainty of inflation, bonds can be quite risky for long-term investors. No one denies that, in the short run, stocks are riskier than fixed-income assets. But in the long run, history has shown that stocks are actually safer than bonds for long-term investors whose goal is to preserve the purchasing power of their wealth. The inflation uncertainty that is inherent in a paper money standard means that “fixed income” and “fixed purchasing power” are not the same thing.” ―Jeremy Siegel


Read Nick's Client's Corner 2025-09 - The Mythology Of Bonds PDF

Read Nick's ATY 096 April 06 - Culture of Language PDF

Read Nick's ATY 150 May 30 - What, Then, Of Bonds? PDF

Read Nick's ATY 151 May 31 - But What About Income? PDF

Read Nick's ATY 152 June 01 - What Are Bonds For? PDF

Read Nick's ATY 154 June 03 - What People Think Bonds Are For PDF

Read Nick's ATY 155 June 04 - People's Other Misperception of Bonds PDF

Read Nick's ATY 165 June 14 - Equities: Life. Bonds: Death-in-Life PDF

Read Nick's ATY 166 June 15 - The Myth of "Enough" Money PDF

Read Nick's ATY 167 June 16 - Really Enough Money PDF


  • The only rational test of an asset's long-term income potential is its long-term total return.
  • Bonds are very useful for funding needs that will require large withdrawals within five years.
  • If one correctly defines money as purchasing power, then over time stocks are much safer than bonds.



Remember, volatility is only a risk during the withdrawal phase, and only if the market is experiencing a downturn (25% chance). This risk is mitigated NOT by using bonds or other low-return investments (that would exacerbate Retirement Risks #1 & #2, but by using an intelligent withdrawal strategy (equites + side-funds and/or variable annuity).