In this episode of The Power of Zero Show, host David McKnight discusses why it may make sense to replace the bonds in your retirement portfolio with a Fixed Index Annuity, and how doing so could lead to a much better outcome for your retirement.

For decades, financial advisors have followed the conventional wisdom of the 60-40, 60% stocks, 40% bonds.

As you approach retirement, that ratio shifts even further in favor of bonds…

…however, the problem is that today’s bond market isn’t built like it used to be, and bond yields are still below their historical averages.

David touches upon the Fixed Indexed Annuity or FIA.

Remember: when you replace the bonds in your portfolio with Fixed Index Annuities, you’re not just getting similar safety. You’re actually improving your outcomes across the board.

David stresses that, in retirement, it’s not all about rates of return. It’s about how consistent that return is.

Something good to keep in mind: bonds can and do lose value. If interest rates spike, bond prices fall. If inflation spikes, bond purchasing power falls.

Are you 5-10 years away from retirement or already retired? If so, it’s time to reevaluate the role of bonds in your portfolio.

The reason for that is that bonds aren’t offering the returns they once did, carry more risk than most people, and they may no longer be the best way to reduce volatility or protect your portfolio.

David puts it bluntly: “If you aren’t using Fixed Index Annuities as a bond alternative, you could be missing out on one of the most powerful safe money strategies available today.”

 

 

Mentioned in this episode:

David’s national bestselling book: The Guru Gap: How America’s Financial Gurus Are Leading You Astray, and How to Get Back on Track

DavidMcKnight.com

DavidMcKnightBooks.com

PowerOfZero.com (free video series)

@mcknightandco on Twitter 

@davidcmcknight on Instagram

David McKnight on YouTube

Get David's Tax-free Tool Kit at taxfreetoolkit.com

Dave Ramsey

Suze Orman

Ken Fisher

S&P 500