What Are Bonds and Why Does Smart Money Live There Part 3 | What the Wealthy Do Ep 17

This is the episode where everything comes together.This is Episode 17 of What the Wealthy Do, Part 3 and the finale of the Bonds Series. In Part 1 we covered what bonds are and why smart money never ignores them. In Part 2 we broke down how interest rates and the yield curve affect bond prices. Today Stephanie Dorsey builds the actual strategy.How much should you allocate to bonds? The old school rule of investing your age in bonds is outdated. The wealthy allocate based on where they are in life, what is happening in the market, and what their goals are. This episode walks through a framework by life stage, from investors in their 20s through 40s holding 5 to 15% in bonds, all the way to investors 60 and beyond thinking about 40 to 60% bond allocation and using bond ladders to create predictable retirement income without selling stocks during a downturn.Which bonds should you buy? This episode covers US Treasury bonds, TIPS, I-bonds, municipal bonds for high earners, investment grade corporate bonds, and bond ETFs for investors with less than $50,000 to put into bonds.The bond ladder strategy is explained in full, including how to reduce interest rate risk, create regular cash flow, and control when and how you reinvest as bonds mature. Stephanie also covers when to increase or pull back bond exposure and the most common mistakes to avoid.Join the next Sovereign Collective cohort for high-earning Black women ready to build real generational wealth: joinsovereign.coIf this series changed how you think about your portfolio, share it with someone who needs to hear it. Leave us a five-star review and follow the podcast so you never miss an episode. See you next week.BACKDOOR ROTH IRA QUICK START CHECKLISTHere is your action plan:Step 1: Open accounts if you do not have themOpen a traditional IRAOpen a Roth IRAUse the same brokerage (Fidelity, Vanguard, or Schwab)Step 2: Clear out any existing traditional IRAsRoll old traditional IRAs into your 401k to avoid the pro-rata ruleStep 3: Contribute to your traditional IRATransfer $7,000 (or $8,000 if 50 or older) from your bank to your traditional IRAKeep it in cash, do not invest it yetStep 4: Convert to Roth IRA (1 to 2 days later)Log into your brokerageConvert the entire traditional IRA balance to your Roth IRAStep 5: Invest your Roth IRABuy index funds or target date fundsStep 6: File Form 8606 with your taxesUse tax software or work with a CPAStep 7: Repeat every JanuaryHSA QUICK START CHECKLISTHere is your action plan:Week 1:Check if you have an HDHP (ask HR or check benefits portal)If yes, check if your employer offers an HSAIf your employer offers an HSA, enroll during next open enrollmentIf your employer does not offer an HSA, open one with FidelityWeek 2:Set up automatic contributions to max out the HSA ($4,300 individual / $8,550 family)If employer HSA: set payroll deductionIf self-directed: set automatic monthly transfer from bankWeek 3:Log into your HSA providerMove funds from cash to investments (leave $1,000 to $2,000 in cash)Invest in low-cost index funds (80% stocks, 20% bonds or target date fund)Week 4:Set up a system to track medical expenses (spreadsheet or app)Commit to paying medical expenses out of pocket, do not touch the HSASave all medical receiptsEvery Year:Max out contributionsRebalance investments if neededContinue saving receiptsWatch it grow tax-freeThis podcast provides financial education and not financial advice.