Big mistake if you park your money forever in bonds

on Oct28
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Suze Orman has a warning for investors relying too heavily on bonds.

The personal finance expert believes the draw of high interest rates and an aversion to risk taking are preventing too many people from taking a “lifetime opportunity” in the stock market.

“Some of these stocks — how do you pass them up? I mean, you have to go into them. Now, do you go into them with everything that you have? No. Do you dollar-cost average into them, and take advantage of [down] days? … Yes,” the “Women & Money” podcast host told CNBC’s “Fast Money” this week. “You’ll be making a big mistake if you park your money forever in bonds.”

Orman, who is also co-founder of emergency fintech company SecureSave, notes long-term investors should have the stomach for the stock market’s twists and turns.

‘I want to buy a stock, and I hope it goes down’

“I have some serious losers at this point. However, I don’t care,” said Orman. “I want to buy a stock, and I hope it goes down. And I hope it goes further down and down so I can accumulate more.”

She does recommend keeping some money in fixed income to mitigate risks in a volatile environment.

At the same time, she still sees a role for bonds in portfolios. She likes the three– and six-month Treasurys and is ready to start looking longer term.

“The play may start to be in long-term Treasurys. So, I’ve started to dip my toe in. Every time the 30-year [yield] crosses five percent, I buy,” said Orman.

The 30-year Treasury yield is still near 2007 highs. It traded above 5% as of Friday’s close.

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