A lot of investors have written off bonds after 2022. In this episode, Paddy Delaney explains why that conclusion is based on a misreading of how bonds work — and what the historical data actually shows.

The 10-year US Treasury yield went from under 6% to over 11% during the 1970s. Bonds still returned 5.4% per year. The worst single year was a loss of less than 1%. If bonds survived that rate environment, what does it mean for the environment we are in today?

In this episode:

- How bond returns are calculated (starting yield and duration)

- Why rising interest rates improve your future bond returns, not reduce them

- What the 1970s data shows, using Damodaran historical records

- What this means practically for anyone with bonds in an ARF or occupational pension

- A short note on lifestyling: being moved into bonds automatically is very different from choosing to hold them

This episode is relevant if you are approaching retirement, already in retirement, or reviewing an ARF or pension that includes a bond allocation.

Resources mentioned: Aswath Damodaran historical return data at pages.stern.nyu.edu/~adamodar/

If you would like to talk through your own situation, book a Clarity Call at informeddecisions.ie/contact

Paddy Delaney is an independent, fee-only investment and retirement planner in Ireland.