Rethinking Bonds: Experts Urge Retirees to Reevaluate ‘Safe’ Investment Strategies
El Paso, TX (KVIA-TV) — As traditional approaches to retirement investing face new scrutiny, financial experts are urging retirees to reconsider their reliance on bonds as "safe" assets. On ABC-7’s Smart Money segment, ABC-7's Nichole Gomez spoke with Patrick Romero of Mirau Capital Management about the evolving role of bonds and the importance of understanding risk in today’s market.
“For years, investors have heard that stocks are for growth and bonds are for safety—but bonds can lose value, too,” Romero explained that while bonds remain an important part of a diversified portfolio, they are not without risk. “Conservative doesn’t mean risk-free. When interest rates rise, existing bond prices generally fall. That surprises people who assume their bond investments can’t lose value,” he said.
The conversation referenced the significant declines bonds experienced in 2022, highlighting the need for retirees to reconsider what they expect from their investments. Romero emphasized that every investment has a purpose and its own unique risks. “It’s not just about how much you have in bonds, but what you’re expecting those investments to accomplish—whether it’s income, stability, or access to your money,” he explained.
As alternatives, Romero recommended retirees look at other tools, such as certain insurance products like fixed indexed annuities, which can help limit losses from market declines while still offering some growth potential. However, he warned, “They also have restrictions, including possible withdrawal charges and limits on returns. The decision should begin with the retiree’s needs.”
With the Federal Reserve continuing to weigh interest-rate decisions in response to inflation, Romero pointed out the close relationship between interest rates and bond prices. “When rates rise, existing bonds can become less attractive compared with newly issued bonds paying higher interest. That can reduce their market value. The Federal Reserve doesn’t control every bond yield, but its decisions can influence borrowing costs and financial markets.”
For those planning for retirement, Romero advised starting by understanding what each part of their portfolio is intended to do, considering income needs, access to savings, and tolerance for fluctuation. “The goal isn’t eliminating every risk. It’s making informed decisions about the risks you’re taking,” he said.
Viewers interested in learning more can request a complimentary consultation and a retirement toolkit, including a copy of Brian’s book, "Smart Money for the Backside of Life." Visit miraucapital.com/tv or call (915) 233-2904 for more information.
