A year ago we didn’t know the market would grow so much, or at all.
A year ago, the expected annual yield on the NYSE was 6-8%. The treasury return for a year was 4%.
Today we don’t know if these trends will continue, stop, or even reverse.
“I don’t know if my plane will crash, so I drive everywhere in order to avoid that risk”.
The expected yield on market investments is higher than the expected yield on treasuries. The real value in treasuries is their convertibility to cash, hedged against the risk of inflation. You are losing money long term if you are putting your retirement income in treasuries.
The whole point of bonds is that they be more stable
The point of low-yield low-risk bonds is that they can be quickly converted to cash when better investment opportunities arise. Alternatively, to be spent on consumer goods and services.
And if you know why people buy treasuries then why did you ask?
You’re using hindsight to pretend like there’s no reason to buy treasuries while also demonstrating an understanding of why people do. You’ll forgive my confusion.
Also, the NYSE had an expected return of 6-8%. That was not at all a guarantee; we didn’t know that. My statement holds true.
Set it and forget it is the point. Give it to your grandkids.
You could do the same with shares in Berkshire or a S&P index fund, to better effect.
Especially at the scale of “national economy”, if you’re betting on Treasuries you are effectively betting on the economy as a whole. Just at a lower potential yield.
Exactly. But keep in mind that those are different things. Treasury bonds carry very little risk of losing money whereas investing in index funds/ETFs can lose you money.
If I can get $20k a month with one of the safest investments around
8% Treasuries don’t exist. The current treasury rate is closer to 4.5% during a period of 2.5% inflation. Higher treasury rates tend to be paired with higher Fed Reserve rates, which tend to occur during periods of high inflation. So the hypothetical 8% Treasury will only be available during periods of 5%+ inflation anyway. You’re still only netting real gains of 2-3%.
Its a safe hedge against a downturn when you only care about preserving your liquidity. It’s a real risk when you consider the possibility of a bull run. You’re effectively losing money when equities surge while you’re setting on a cash-convertible.
Yes and good luck finding a 8% treasury (and please let me know if you do) 😆
The DOW grew 25% over the last year.
The S&P grew 30%
The NASDAQ grew 35%
What are you doing buying 8% Treasury Bonds?
A year ago we didn’t know the market would grow so much, or at all.
Today we don’t know if these trends will continue, stop, or even reverse. Past performance doesn’t guarantee future returns, yada yada.
The whole point of bonds is that they be more stable and reliable than other securities. They’re a useful tool for investors looking for stability.
A year ago, the expected annual yield on the NYSE was 6-8%. The treasury return for a year was 4%.
“I don’t know if my plane will crash, so I drive everywhere in order to avoid that risk”.
The expected yield on market investments is higher than the expected yield on treasuries. The real value in treasuries is their convertibility to cash, hedged against the risk of inflation. You are losing money long term if you are putting your retirement income in treasuries.
The point of low-yield low-risk bonds is that they can be quickly converted to cash when better investment opportunities arise. Alternatively, to be spent on consumer goods and services.
Who said anything about retirement?
And if you know why people buy treasuries then why did you ask?
You’re using hindsight to pretend like there’s no reason to buy treasuries while also demonstrating an understanding of why people do. You’ll forgive my confusion.
Also, the NYSE had an expected return of 6-8%. That was not at all a guarantee; we didn’t know that. My statement holds true.
Set it and forget it. I dont have to worry about the dow contracting with a treasury bond. That’s the literal point.
Point to a five year period in which the DOW ended lower than when it started.
If you’re operating at the scale of a high yield treasury, you’d be far better off in the market over the long term.
I dont disagree, but nothing about what you have said invalidates what I had stated. Set it and forget it is the point. Give it to your grandkids.
You could do the same with shares in Berkshire or a S&P index fund, to better effect.
Especially at the scale of “national economy”, if you’re betting on Treasuries you are effectively betting on the economy as a whole. Just at a lower potential yield.
This is why people be like “real advice is in the comments”
Exactly. But keep in mind that those are different things. Treasury bonds carry very little risk of losing money whereas investing in index funds/ETFs can lose you money.
At any point in time those could also shrink by 25-35% over a year
Over 5, they’ll rebound and exceed the trough.
Treasury is pretty safe.
So is Berkshire Hathaway.
What’s their gain this year? 🤔
33% over the year
27% ytd
122% over five years
1824% over the last thirty
Time to invest!
The best time to invest was ten years ago. The second best time is now.
On the other hand, If I can get $20k a month with one of the safest investments around, I’m not screwing around with the stock market.
8% Treasuries don’t exist. The current treasury rate is closer to 4.5% during a period of 2.5% inflation. Higher treasury rates tend to be paired with higher Fed Reserve rates, which tend to occur during periods of high inflation. So the hypothetical 8% Treasury will only be available during periods of 5%+ inflation anyway. You’re still only netting real gains of 2-3%.
Its a safe hedge against a downturn when you only care about preserving your liquidity. It’s a real risk when you consider the possibility of a bull run. You’re effectively losing money when equities surge while you’re setting on a cash-convertible.