Dave Ramsey Tells US Retirees to Dump Bonds as Stocks Soar 12% and Bond Funds Lose Money This Year

Financial guru Dave Ramsey challenged one of the most popular trends in retirement investing: that Americans should move a large portion of their portfolios into bonds as they get older.

During Wednesday's episode of The Ramsey Show titled 'Short-Term Pain, Long-Term Peace,' Ramsey said that conventional wisdom isn't wise, specifically highlighting the standard rule of slowly weighing your investment portfolio towards bonds as you age.

'If you follow conventional wisdom on the average diet in America, you will be obese. If you follow conventional wisdom on the proper way to be married, you won't be long. Conventional wisdom isn't wise,' he had stated.

Ramsey explained that there remains a risk in blindly following a rule that labels bonds as automatically safe. 'Year to date, the S&P is up 12%. You know what the bond market has averaged since the beginning of the year? Less than 1%.' In reality, the bond returns are worse than he described.

BlackRock's latest published NAV data showed the iShares Core US Aggregate Bond ETF (AGG) is minus 0.32% on a total-return basis through 4th September. In short, if a US retiree moved a $1 million portfolio from stocks into an aggregate bond fund at the start of 2026, it would be worth less today than at the beginning of the year.

Ramsey Gets Inflation Wrong, but Bond Argument Still Stands

During the show, Ramsey said: 'If you don't make 4.2% on your money, the inflation rate, you are going backward in real purchasing power. If you need to pay taxes, you need a little over 6% just to break even.'

However, the BLS Consumer Price Index for All Urban Consumers rose around 3.4% year over year in July. While this rate is lower than what Ramsey claimed, his argument on bonds remains solid.

The 10-year Treasury yield was 4.83% and the 30-year yield at 5.28% as of 9th September. On an inflation-protected basis, the 10-year TIPS yields 2.46%, and the 30-year TIPS yields 2.98%, which is the real, after-inflation return on bonds, that too before taxes and transaction costs. Note that these are inflation-adjusted yields for Treasury Inflation-Protected Securities, rather than expected real returns for the broader bond market.

In a simplified scenario where a $1 million portfolio earns a constant 2.46% real return while the retiree withdraws an inflation-adjusted $40,000 a year following the classic 4% withdrawal rule, the principal shrinks every year in real terms.

Ramsey's Latest Views Align With His Longstanding Investment Philosophy

In a 2025 response published by Ramsey Solutions, Ramsey had said he did not own bonds and argued that bonds are not as safe as investors often assume because their values can move significantly when interest rates change. He said he preferred diversified growth-stock mutual funds and a long-term, buy-and-hold approach.

Ramsey Solutions' own retirement guidance similarly says it does not recommend making bonds the foundation of a retirement portfolio, arguing that their returns have historically been less attractive than those of growth-stock mutual funds.

An investor looking only at bond prices might assume that bonds are supposed to provide stability regardless of market conditions, but bond funds can lose value even when they continue paying interest.

When market yields rise, newly issued bonds generally offer more lucrative rates. Existing bonds paying lower coupons consequently become less valuable, pushing their market prices lower.

A bond may continue paying its scheduled interest, yet the fund holding that bond can still post a negative total return if price declines outweigh the income received. That is essentially what has happened with AGG this year.