Why Bonds Underperform: Where Business Owners Should Allocate Cash

Featuring insights from Brett Redd, Linked Wealth Advisors

Introduction: Are Bonds Really “Safe”?

For years, business owners have been told the same thing:

Stocks are for growth. Bonds are for safety.

It sounds responsible. It sounds balanced.

And for a long time, it made sense.

But over the last decade, many business owners have started asking a different question:

Why haven’t bonds actually performed the way we expected?

As part of our Strategic Partner Series at FJ & Associates, we sat down with Brett Redd of Linked Wealth Advisors to break down what’s really happening inside bond investments—and why the traditional narrative no longer tells the full story.

The Core Misunderstanding: You’re Not Buying “Bonds”

Most people think they’re investing in stable, predictable income.

They hear terms like:

• “Fixed income”
• “3% coupon”
• “Safe allocation”

And assume consistency.

But in reality, most investors today aren’t buying individual bonds.

They’re buying bond funds or bond indexes.

“You’re basically buying the family of bonds.” — Brett Redd

That distinction matters more than most people realize.

What a Bond Index Actually Is

A bond index is not a single predictable investment.

It’s a collection of bonds that are constantly being bought and sold.

That means:

• Prices fluctuate
• Performance varies
• Returns are influenced by market conditions

At that point, it starts behaving less like a fixed-income asset…

…and more like a market-driven investment.

Why Bond Investments Fluctuate More Than Expected

If you’ve seen your bond portfolio move more than expected, there’s a reason.

Bond indexes are influenced by several key factors:

1. Interest Rates

When interest rates rise, older bonds with lower yields become less attractive.

Result:

Bond values drop.

2. Federal Reserve Policy

Changes in monetary policy directly impact bond pricing.

“Depending on what the Fed is doing… these bond values can go up and down.” — Brett Redd

3. Market Trading Activity

Bond funds are actively traded.

“It’s just like a stock… time to sell high or buy low.” — Brett Redd

That introduces volatility most investors don’t expect from something labeled “safe.”

4. Global and Currency Factors

Bond markets are also affected by:

• Currency strength
• Inflation expectations
• Global economic shifts

All of which add another layer of unpredictability.

Why This Matters for Business Owners

This isn’t just an investment conversation—it’s a capital allocation decision.

Many business owners:

• Park excess cash in bonds
• Assume stability
• Expect predictable returns

But if those investments are tied to market movement, they may not provide the security you’re expecting.

For business owners in Utah and beyond, the real question becomes:

If bonds aren’t truly stable, what role should they actually play?

Rethinking “Safe” Investments

The takeaway isn’t that bonds are bad.

It’s that the way people invest in bonds has changed.

And if your understanding hasn’t changed with it, your strategy may be off.

At FJ & Associates, we help business owners move beyond labels like:

• “Safe”
• “Conservative”
• “Balanced”

And instead focus on:

How investments actually behave in real-world conditions.

How FJ & Associates Helps You Navigate This

As a virtual-first CPA and advisory firm, we work with business owners to align financial decisions with real performance—not assumptions.

That includes:

• Evaluating where excess cash should be held
• Aligning investment decisions with tax strategy
• Understanding risk across both business and personal assets
• Building a strategy that evolves as your business grows

Because the goal isn’t just to be “safe.”

It’s to be strategic.

Key Takeaways: Bond Index Risks and Capital AllocationKey Takeaways

• Bonds are often misunderstood—especially when invested through indexes
• Bond funds can fluctuate significantly due to market forces
• Interest rates and Federal Reserve policy play a major role in performance
• Business owners should rethink where they park excess capital
• “Safe” doesn’t always mean stable

FAQs

Are bonds still considered safe investments?

They can be—but it depends on how you invest in them. Individual bonds behave differently than bond indexes.

Why have bond investments underperformed?

Because bond indexes are influenced by interest rates, trading activity, and economic policy.

Do bond prices go up and down?

Yes. Especially when interest rates change or markets shift.

What is a bond index?

A collection of bonds grouped together and traded as a single investment.

Should business owners rely on bonds for stability?

Not without understanding how those investments actually behave in today’s market.

Work With FJ & Associates

If you’re asking:

• “Where should I hold excess cash?”
• “What’s actually low-risk vs just labeled that way?”
• “How do I align investments with tax strategy?”

That’s where we come in.

We help business owners make decisions based on real numbers, real behavior, and real strategy—not outdated assumptions.

Author Bio

Missy Dennis, CPA

Partner | FJ & Associates, PLLC

Missy Dennis is a Certified Public Accountant with over 20 years of experience helping business owners navigate complex financial decisions.

She specializes in:

• Tax strategy and planning
• Business advisory
• Bookkeeping system alignment
• Estate and trust taxation
• Nonprofit and housing compliance

Missy is known for delivering clear, actionable guidance that helps clients make confident financial decisions.