Knowing the Down Side of Treasury Bonds Is Essential

Treasuries can still play a meaningful role in a diversified portfolio, but this article does a good job of quantifying the risks in a way most owners of treasuries don’t fully understand.

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The Risks Lurking in Treasury Bonds

How’s this for an investment opportunity: a guaranteed yield of 3.27 percent, with an enormous potential downside. As risky as that sounds, millions of investors are moving money into Treasury bonds as a “safe haven.” In early September, the yield on the 30-year Treasury bond sank to a new low of 3.27 percent, while the 10-year note fell to 1.9 percent. If the inflation rate stays anywhere close to its current modest 3.6 percent pace, long-term investors will be guaranteed to lose money after factoring in inflation’s toll. And that’s only scratching the surface of the risks. …

Read the full article at Bloomberg.


The content contained in this blog post is intended for general informational purposes only and is not meant to constitute legal, tax, accounting or investment advice. You should consult a qualified legal or tax professional regarding your specific situation. Keep in mind that investing involves risk. The value of your investment will fluctuate over time and you may gain or lose money.
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