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The 'old convention' for saving in retirement is outdated, expert says: How to shift your strategy

Feb 19, 2022 0 comments

Following the conventional wisdom can get you far in the investing world. That's because much of the advice for building a successful portfolio is based>How inflation and interest rates affect retirement planning

To understand why retirement calculations are shifting, it's important to take a look at how bonds behave.

Investors hold bonds for two reasons. One is to preserve capital. Because bond prices don't fluctuate as much as stock prices do, a portfolio of bonds is less susceptible to big drawdowns.

If you need to use money from your portfolio in short order, either because the money is earmarked for a short-term goal or because it's money you intend to live off of in retirement, that's a big deal. If you're about to retire or recently retired, a bearish downturn could derail your plans.

The other purpose is to provide income. Bonds provide interest payments that investors could theoretically use to supplement their income in retirement.

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