Ken Fisher on the Role of Bonds in Your Retirement Portfolio

Fisher Investments’ founder and Co-Chief Investment Officer Ken Fisher believes, instead of using bonds, there are more efficient strategies to generate retirement cashflow. Investors often associate bonds with income because most bonds are set up to pay a certain amount of money over a fixed period. According to Ken Fisher, bonds’ fixed payments may help some retirees control their spending habits, but there are likely better ways to invest and generate retirement income.

Ken Fisher says bonds’ primary purpose shouldn’t be to generate yield—it should be to lessen short-term portfolio volatility. Because many investors struggle emotionally to invest in stocks due to the inherent short-term volatility, bonds’ generally lower short-term risk and return can help reduce portfolio volatility and help investors stay disciplined to a long-term plan.

Ken Fisher believes a better way to approach retirement investing is to manage your investments for long-term return, plan for a conservative long-term rate of return and synthetically create cash flows by withdrawing money in a tax-efficient manner. Ken has often referred to this practice of selling securities to generate cash flow as creating “homegrown dividends.”

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Investing in securities involves a risk of loss. Past performance is never a guarantee of future returns. Investing in foreign stock markets involves additional risks, such as the risk of currency fluctuations. The foregoing constitutes the general views of Fisher Investments and should not be regarded as personalized investment advice. Nothing herein is intended to be a recommendation. The opinions expressed are subject to change without notice.

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