3 Reasons I'm Not Investing in Bonds, No Matter What

Here are three reasons I will never invest in bonds, no matter how old I am.

1. Poor Performance in Inflationary Environments

Bonds are terrible investment tools in inflationary environments. Because the return is already locked in, as prices go up and the dollar becomes worth less, my bond returns suffer significantly.

2. Too Long of a Time Horizon

I looked up my predicted lifespan based on my age, health, and family history. If I'm going to make it to 85 years old, even at a retirement age of 60 to 65, that gives me a 20-year time horizon after retirement. I'm not interested in trading long-term growth for short-term stability.

3. Misunderstanding of Withdrawal Requirements

And this one might seem ridiculous, but the world thinks that when you retire, you need to take out all your money. If the stock market has crashed, you’re just screwed. But that’s not how it works. When you retire, you must take what's called a required minimum distribution (RMD), which typically ends up being about 3% to 5% of your overall portfolio. So if the market has just crashed 20%, that’s okay. The majority of my portfolio is going to stay invested, just like it has been throughout most of my life.

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