The Money with Katie Show Are Bonds Actually...Hurting Our Portfolios?
Oct 7, 2024
The discussion dives into whether bonds are still a valuable addition to investment portfolios given their lackluster returns. The hosts analyze traditional advice on asset allocation and challenge beliefs about bond performance in bear markets. They compare bonds to high-yield savings accounts, offering insights into risk tolerance and volatility. Listener feedback leads to a broader examination of how systemic issues influence financial choices, urging a more mindful approach to personal finance amidst the ever-changing economic landscape.
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Abby's Question on Bonds
- Abby asks about maximizing returns while balancing risk as they approach FI, questioning traditional stock/bond allocations.
- She points out BND's seemingly poor performance, considering consumer staples ETFs as an alternative.
Danielle's Savings Bond Story
- Danielle asks about the efficacy of savings bonds given their seemingly low returns compared to index funds.
- She shares an example of a $50 savings bond from 1994 maturing to $164, questioning their relevance today.
Bond ETFs vs. Individual Bonds
- Katie Gatti-Tosanni explains that bond ETFs, unlike individual bonds, don't have a single maturity date.
- Their price fluctuates inversely with interest rates, while their yield reflects average interest of underlying bonds, not price appreciation.