Why not spyi or something similar instead of bonds?

The only bonds I approve of are T-Bills, especially in an ETF like SGOV, VBIL, etc. Holding bonds it's really a losing strategy in modern times, sure before massive debt and risky political situation it might have been a good idea but not now. Inflation is double of what CPI says, M2 money supply is expanding.

These are terrible products that cannibalize themselves and generate a lot of taxes. Here is why you should never use them. Watch and learn and also look at the follow-up video:

Nor should you be holding bonds for "returns". They do not do that well. In a stock-based portfolio, the only good reasons to hold bonds are diversification and stability, and different bonds suit those purposes. The returns of bonds are incidental to the real purposes they serve in most portfolios.

https://youtu.be/ygVObRx9X68

While high-yield dividend funds like SPYI may seem appealing, it’s important to know what they are. SPYI isn’t a simple dividend stock fund—it’s an actively managed options-based ETF that uses covered calls to boost yield. That structure can sometimes enhance returns, but it can also cap upside and lower total performance, and the fund itself doesn’t have a long track record across multiple market cycles.

The reason we hold short-term U.S. Treasuries in a portfolio isn’t yield—it’s safety. Treasuries don’t lose principal, and they provide stability when equities crash. In our historical analysis across the 1990s bull market, the 1970s stagflation, the 1930s Depression, and the 2000s “lost decade,” only the Treasury sleeve consistently cushioned the portfolio from devastating drawdowns.

That’s why Warren Buffett recommends always keeping at least 20% in Treasuries. They serve as the goalkeeper—not scoring goals, but preventing catastrophic losses. And by rebalancing once or twice a year, you enforce discipline: trimming stocks when they run too far, and adding to them when they’ve fallen, using Treasuries as dry powder. The 80–20 mix is less about chasing the highest yield today, and more about building a portfolio that can survive—and keep compounding—through every season of the market.

Your question actually inspired me to write a full blog post breaking this down in greater detail. You can read the full analysis, complete with tables and charts, on Coach Holdren’s blog at this link:

Simpli-FI.money | Thought Experiment: The 80-20 Mix Strategy - Simpli-FI.money

I hope this provides insight to your question and good luck on your FI journey!

Coach Holdren

SPYI aims to provide high monthly income while still capturing some upside when the market rises. Depends what stage of FI you are in and under what conditions you plan on accessing income. Dividends are forced taxable income. That would not fit my needs, but my all-weather portfolio produces enough with a 70/30 split. For me the composition of taxable/non-taxable income is more critical.

First, what problem are you trying to solve? If it is diversification, or lowering volatility, then concentrating part of your holding in a small number of stocks sounds like what Big ERN calls "de-worsification". If you are trying to generate income, then you need to think about what sort of account the holding is in. Based on the fact that you specifically highlight the higher yield of certain stocks compared with conventional bonds, I'm guessing your interest is in income generation.

Things which throw off a dividend of any sort force a taxable event when held in an account that isn't tax-advantaged. The larger the dividend, the larger the taxable event they force on you. With a portfolio where you are deciding what and when to sell, you have more control over the tax consequences. Also, dividends aren't a "freebie". When a company pays a dividend, its stock price declines by a corresponding amount. When you are invested in a stock that doesn't pay a dividend, you decide precisely when and how much to sell and then you handle the tax consequences of that. For your dividend stocks, the directors of the company are making that decision for you and without your input.