Hello Reader,
Happy Wednesday!
“Why don’t we invest in bonds?” my wife asked. Fair question.
Most advice says “go all stocks when you’re young,” but that’s not the whole story.
We pulled up our plan and walked through the trade-offs. In your 30s, you likely have a long runway (20–30 years). Over long periods, stocks have historically returned more than bonds, but with bigger, scarier drops along the way. Bonds usually return less, but they steady the ride and give you something to rebalance from when markets fall.
We looked at two simple, long-run illustrations for a 30-year horizon:
- A stock-heavy mix (say 90% stocks / 10% bonds) has higher expected returns but deeper drawdowns.
- A balanced-ish mix (say 70% stocks / 30% bonds) generally returns a bit less, yet cuts volatility and reduces the odds you panic or pause contributions at the worst time.
Neither is “right.” The right mix is the one you can actually stick with through a bad year.
A Practical Framework for Bonds in Your 30s
1) Start with purpose, not products.
What is this money for and when will you need it?
- Emergency fund or expenses within 3 years: keep in cash/high-yield savings, not bonds or stocks.
- Retirement in 20–30 years: growth first (stocks), stabilizers second (bonds).
- Medium-term goals (home in 5–10 years): blend more bonds and cash to protect principal.
2) Understand the trade-off (in plain language).
- Stocks: higher expected return, higher volatility, bigger temporary losses.
- Bonds: lower expected return, lower volatility, income, ballast during stock selloffs. Bonds aren’t there to “beat” stocks; they’re there so you keep buying stocks when it feels hardest.
3) Choose a bond role, then a bond type.
What job should bonds do for you?
- Stability and broad diversification: a core U.S. aggregate bond index fund (often labeled “Total Bond”).
- Inflation hedging: TIPS funds (inflation-linked bonds).
- Capital preservation for near-term needs: short-term Treasuries or short-term bond funds. Avoid chasing yield with long-duration or low-quality bonds if your goal is stability.
4) Pick an equity/bond mix you can live with. For many in their 30s with a strong emergency fund, a stock-heavy allocation like 80–90% stocks / 10–20% bonds is reasonable. If you’ve ever reduced or stopped contributions during a downturn, consider 70/30. A slightly lower return on paper often wins in real life because you’ll actually stick with it.
5) Implement simply and automate.
Two easy routes:
- One-fund option: a low-cost target-date fund that matches your expected retirement year.
- Two/three-fund option: Total U.S. Stock + Total International Stock + Total Bond (with your chosen percentages). Turn on automatic contributions and automatic rebalancing annually so your mix doesn’t drift.
6) Keep bonds out of the emergency fund decision.
Cash is for surprises; bonds are for portfolio stability. Don’t blur the roles. Build 3–6 months of expenses in cash before debating 5% more bonds.
7) Revisit when life changes.
Big raise, new mortgage, child, business risk—each can justify nudging your bond weight up or down. Make written rules now so emotions don’t decide later.
Your actions
Block 20 minutes to write your allocation on one page: purpose, time horizon, target mix, the actual funds, and how you’ll rebalance.
Have a question, hit reply with your current lineup.
Check out my X post on how to get the right setup
JJ – Millionaire Mindset
@JJsFinclub
If you’re managing bills, transfers, and due dates manually—you’re wasting time and peace of mind.
The wealthy don’t “budget” daily.
They build systems that handle it for them.
My setup looks like this:
10:56 AM • Oct 17, 2025
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Yours truly,
JJ – Millionaire Mindset
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