Sticking With Bonds Will Sap Value
When Warren Buffet says…….anything, do you listen?
In a letter Buffett wrote in February to shareholders of Omaha, Nebraska-based Berkshire that bonds are “dangerous” assets because low interest rates may not compensate for the risk that purchasing power will be eroded. Treasury 10-year note yields fell to a record low of 1.4387 percent on June 1 amid concern Europe’s two-year debt crisis is worsening and U.S. employment growth is slowing.
Even if you avoid bond funds and buy individual high grade bonds only, bonds are still a bad investment right now. Inflation has averaged 3-4% per year over the past 100 years. The current multi-decade low bond yield won’t even keep up with inflation. This is why Treasury Inflation-Protected bonds (TIP) now have negative yields. If you buy long term high grade bonds today, you have essentially bought a certain loss “investment”.(seekingalpha.com)
One Response to “Sticking With Bonds Will Sap Value”
July 10th, 2012 saat: 1:44 pm
If you retired from GM after October 1, 1997, you know that your pension option decision time is coming to a close. On June 1, General Motors announced their plan to lessen their pension liability by approximately 26 billion dollars. This leaves you with the power to choose between a one-time lump-sum payment, continuing with your current monthly payment, or taking a new form of monthly benefit. You need to decide which option you’ll go with by July 20, 2012. Before you do, it’s important to understand the complexity of each and every option so that you can choose which is best for you. Additionally, it’s highly encouraged that you seek the advice of a seasoned financial planner.
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