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To: Uncle Miltie

Millie-What’s wrong with bonds/treasury bills?


19 posted on 06/12/2021 8:11:19 AM PDT by DIRTYSECRET
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To: DIRTYSECRET

In a rising interest rate environment, they will be clobbered hard.

Let’s say that today you buy $100,000 of 10 year government bonds yielding $1,000 per year (1%).

Then inflation skyrockets and the Fed and the market drive the required interest on 10 year bond to 2%.

What is your $1,000 annual interest payment worth in a 2% world? $1,000 / 2% = $50,000.

You just lost half your money.

How do you feel about government “securities” now?


21 posted on 06/12/2021 8:17:47 AM PDT by Uncle Miltie (I'm changing my name to 'Spike Protein'!)
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