Welcome to the State Welfy podcast. I'm your host Taylor Schulte, and today I'm tackling

part two of my What the is happening to Bond series. If you miss part one, I highly recommend

starting there first because I'm building on that episode here today. Specifically, in part

two, I'm answering three big questions. Number one,

with cash yielding 5%, does it make more sense to use money market funds or T-bills as a bond

alternative? Number two, what should investors do if they own the wrong types of bonds and need to make

changes? Finally, number three, does the current landscape shift

how retirement investors should approach this asset class going forward? From the links and resources

mentioned today, just head over to you staywealthy.com forward slash 204. As noted in part one, if and how you invest in bonds depends on your needs, goals, and desired level of risk.

While the current bond environment certainly looks very different today than it did three years ago,

the same principles of investing still apply. In short, investment-grade bonds contain less risk than stocks.

Therefore, an investor should expect lower returns from their bonds over long periods of time.

If an investor wants or needs higher long-term returns, well, they should allocate more to stocks

than to bonds. To put some numbers to all of this, since 1926,

U.S. stocks have had an average annual rate of return of about 10%.

Bonds, on the other hand, have had an average annual return of about 4.8% during the same time period.

And cash being the least risky at asset class of all

has had an average annual return of about 3% since 1926.

There are, of course, time periods

where the safe stuff outperforms the risky stuff,

but on average, over long periods of time,

you should expect higher returns when you take more risk. With all of that being

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