Ep. 2000: Bonds Are Doing Their Job

Bond prices are falling as yields rise—and that does not mean diversification has failed. Don and Tom explain why high-quality bonds can decline when stocks and the economy are strong, why that behavior is normal, and why chasing high-yield or “alternative” bond funds can quietly turn the conservative side of a portfolio into more stock-market risk. They also answer questions about Roth conversions after required minimum distributions have begun, whether conversion taxes should ever come from retirement assets, and whether buying an annuity for a child makes sense compared with a Roth IRA or 529 plan. 00:00 Nashville-style intro 02:16 Why bond prices are falling 04:02 Comparing BND, municipal, Treasury, and high-yield funds 05:40 What a balanced portfolio is supposed to do 07:17 The hidden risk in “better-performing” bond funds 11:47 Stocks for growth, bonds for cushion 14:19 Roth conversions after RMDs begin 22:28 Listener questions 24:16 Paying Roth-conversion taxes 26:46 An annuity for a child? 31:46 Wrap-up 32:37 Disclosures Questions? Comments? Click the microphone at TalkingRealMoney.com. Questions? Comments? Click!