The Long Term Investor Why Your Bond Questions Are Really About Cash (EP.235)
Dec 17, 2025
Unravel the mystery of bond questions that often reflect deeper cash management issues. Discover how to quickly differentiate between portfolio decisions and cash needs. Learn about the benefits of maintaining one to two years of cash for retirees and why simplification with short-term bond funds may be more effective than complex bond ladders. Get insights into a three-bucket cash management system that balances immediate cash needs with long-term investing goals.
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Bond Questions Often Mask Cash Problems
- Many bond questions are actually cash management questions, not portfolio bond-allocation issues.
- Distinguish money needed on your schedule (cash) from money that can ride market volatility (investing).
Use Cash Only For Scheduled Short-Term Needs
- Keep cash for money that must follow your schedule, like tuition, taxes, or near-term known bills.
- Avoid expecting cash to outpace inflation because long-term after-tax real returns on cash are often negative.
Target 1–2 Years Of Cash In Retirement
- Hold one to two years of cash going into or during retirement to reduce forced selling during downturns.
- This buffer lowers the chance you'll sell stocks while the market is sliding, protecting your plan.