Is fixed income "safe" if your current yield is 4 x your exp

[floatingdoc]

If you spend about 55k per year currently, and can utilize a bond fund paying approximately 135k TAX FREE, What say you guys about a fixed income monthly dividend that gives me 4 times my annual expenses. I am inclined to go 100% fixed income as I will not have to worry about a market crash and really do not care about the nav of the fund as I will be using some dividend coupons monthly and reinvesting the remainder as an inflation hedge. WHY UNDER THIS SCENARIO, SHOULD ONE BE TAKING STOCK MARKET RISK? The fund is a diversified but long muni fund.

[KyleAAA]

Because studies show 100% fixed income is riskier than including SOME equities. I think the safest portfolio contains something like 10-15% equities.

You'd have to find an efficient frontier chart. And of course, the least-risky mix is going to change depending on when you look, but rarely if ever is it 100% bonds.

[wesleymouch]

The danger is high inflation (collapse of the currency the bonds are denominated in). Equities, especially foreign ones, will help protect you from that externality

[floatingdoc]

My thought is that my personal inflation rate should be well under 2% based on current expenses. I am reading a book by Richelson called "Bonds-the unbeaten path to secure investment growth". This book goes a long way to debunk the myth that all bonds cannot be a winner in Retirement. Very interesting reading. Certainly encouraging for me and my approach. I have also to take a look at work by Zvie Bodie? i guess

[downshiftme]

You can safely provide all the income you expect to need with only a portion of your portfolio. Why would you not diversify the excess into other asset classes, as insurance against the unexpected if nothing else? If you put even half in equities, you still get 2x your annual expenses in yield and have hedged against the (however likely or unlikely you judge it to be) scenario of inflation so great it impacts the value of your bonds and/or dividends. You may as well buy safety with money you don't otherwise need.