David McKnight addresses something Dave Ramsey has been saying for years: "You should NEVER own bonds in retirement!"
David points out that the tool that actually solves the problem Ramsey has been trying to avoid is the same one he spent years mocking on his call-in show: the Fixed-Indexed Annuity.
Ramsey's argument is that stocks outperform bonds over time – hence, bonds should be avoided as they're "slow, underperforming, and risky."
David indicates what Ramsey is half right about, as well as something he's missing the mark on…
David discusses how bonds can act as a sort of volatility buffer, despite what Ramsey preaches.
The irony is that the best alternative to bonds is something that Ramsey has derided for years (the Fixed-Indexed Annuity).
David goes through the key differences between a Fixed-Indexed Annuity and a bond.
In years when your stock portfolio is down, you can draw from your annuity – this gives your stock time to recover before you start taking further distributions.
That act alone can increase your sustainable withdrawal rate on the stock portion of your portfolio from 4% to as high as 8% with a 95% success rate.
David's disagreement with Dave Ramsey isn't so much with the suggestion of getting rid of bonds, something David actually agrees with, but it's missing the most important part: what you replace bonds with matters.
Remember: there's no better bond alternative in the retirement space than the Fixed-Indexed Annuity.
Mentioned in this episode:
David's national bestselling book: The Guru Gap: How America's Financial Gurus Are Leading You Astray, and How to Get Back on Track
PowerOfZero.com (free video series)
@mcknightandco on Twitter
@davidcmcknight on Instagram
David McKnight on YouTube
Get David's Tax-free Tool Kit at taxfreetoolkit.com
Popular Podcasts
Las Culturistas with Matt Rogers and Bowen Yang
Ding dong! Join your culture consultants, Matt Rogers and Bowen Yang, on an unforgettable journey into the beating heart of CULTURE. Alongside sizzling special guests, they GET INTO the hottest pop-culture moments of the day and the formative cultural experiences that turned them into Culturistas. Produced by the Big Money Players Network and iHeartRadio.
Crime Junkie
Does hearing about a true crime case always leave you scouring the internet for the truth behind the story? Dive into your next mystery with Crime Junkie. Every Monday, join your host Ashley Flowers as she unravels all the details of infamous and underreported true crime cases with her best friend Brit Prawat. From cold cases to missing persons and heroes in our community who seek justice, Crime Junkie is your destination for theories and stories you won’t hear anywhere else. Whether you're a seasoned true crime enthusiast or new to the genre, you'll find yourself on the edge of your seat awaiting a new episode every Monday. If you can never get enough true crime... Congratulations, you’ve found your people. Follow to join a community of Crime Junkies! Crime Junkie is presented by Audiochuck Media Company.
The Brothers Ortiz
The Brothers Ortiz is the story of two brothers–both successful, but in very different ways. Gabe Ortiz becomes a third-highest ranking officer in all of Texas while his younger brother Larry climbs the ranks in Puro Tango Blast, a notorious Texas Prison gang. Gabe doesn’t know all the details of his brother’s nefarious dealings, and he’s made a point not to ask, to protect their relationship. But when Larry is murdered during a home invasion in a rented beach house, Gabe has no choice but to look into what happened that night. To solve Larry’s murder, Gabe, and the whole Ortiz family, must ask each other tough questions.