Bonds. Are They Necessary?
Do you allocate a certain percentage of your portfolio to bonds?
Bonds were historically used for 3 reasons:
1️⃣ Income
2️⃣ Stability
3️⃣ Psychological comfort
They made sense when yields were 5–8% and pensions covered the basics. Bonds dampened volatility and paid you to wait.
But today?
If you have:
• Long runway
• Strong cash flow
• Emotional discipline
• No pension (so you need growth)
You don’t automatically need bonds.
Modern evidence from academics like Eugene Fama and practitioners like Warren Buffett has shown that long-term equity exposure has historically delivered superior real returns — and volatility only matters if you’re forced to sell.
So what can replace bonds?
✔️ Global low-cost equity ETFs (broad diversification)
✔️ Cash wedge for short-term needs
✔️ Flexible withdrawal strategy
✔️ Human capital (your earning power)
✔️ Real assets (selectively)
Bonds aren’t “required.” They’re a tool.
If your plan can survive a 20–30% drawdown without panic selling… growth may be the smarter ballast.
