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It occurs to me that ...

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drunk
, 05-08-2016 at 10:19 AM (43097 Views)
[QUOTE=drunk;190465]
Quote Originally Posted by marriedputter View Post
Which is why those close to retirement put more and more money in US Treasuries.

The average annual rate of inflation is 3.22%. As you can see from this chart if you buy a Treasury Bond the yield is so low that you will actually have guaranteed yourself a loss. The price may fluctuate if you decide you need money and want to sell the bond. A person may gain but a person who is so conservative to buy this investment could not possibly be motivated by that prospect. However the prospect of losing money in a trade, which is also possible, would probably be crushing to them.

Treasury Yields


NAME COUPON PRICE YIELD 1 MONTH 1 YEAR TIME (EDT)
GB3:GOV
3 Month		 0.00 0.19 0.19% -3 +19 5/6/2016
GB6:GOV
6 Month		 0.00 0.37 0.38% +4 +30 5/6/2016
GB12:GOV
12 Month		 0.00 0.50 0.50% -1 +28 5/6/2016
GT2:GOV
2 Year		 0.75 100.03 0.73% +4 +16 5/6/2016
GT5:GOV
5 Year		 1.38 100.70 1.23% +8 -26 5/6/2016
GT10:GOV
10 Year		 1.63 98.63 1.78% +6 -37 5/6/2016
GT30:GOV
30 Year		 2.50 97.38 2.63% +8 -27 5/6/2016











Time Frame



+


Indicators



BUSY:IND
-0.21%

BAGY:IND
0.02%

BUSC:IND
0.97%




9111315171921232527295? 135
-1.000000-0.5000000.0000000.5000001.000000



05/06-0.207394%








NAME VALUE CHANGE MTD RETURN 52-WEEK RETURN EFFECTIVE YIELD
BUSY:IND
Bloomberg US Treasury Bond Index
 127.03 -0.17 +0.31 +4.22% 1.31%
BAGY:IND
Bloomberg US Agency Bond Index
 120.44 -0.09 +0.20 +2.72% 1.39%
BUSC:IND
Bloomberg US Corporate Bond Index
 143.11 -0.28 +0.17 +4.29% 3.03%



Federal Reserve Rates


RATE CURRENT 1 YEAR PRIOR
FDFD:IND
Fed Funds Rate
 0.37 0.08
FDTR:IND
Fed Reserve Target
 0.50 0.25
PRIME:IND
Prime Rate
 3.50 3.25


Municipal Bonds


NAME YIELD 1 DAY 1 MONTH 1 YEAR TIME (EDT)
BVMB1Y:IND
Muni Bonds 1 Year Yield
 0.56% -1 -2 +24 5/6/2016
BVMB2Y:IND
Muni Bonds 2 Year Yield
 0.68% +0 -2 +6 5/6/2016
BVMB5Y:IND
Muni Bonds 5 Year Yield
 1.00% +0 -8 -41 5/6/2016
BVMB10Y:IND
Muni Bonds 10 Year Yield
 1.59% -1 -8 -61 5/6/2016
BVMB30Y:IND
Muni Bonds 30 Year Yield
 2.48% -1 -12 -78 5/6/2016









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Comments

  1. marriedputter's Avatar
    My comment on bonds was not meant to communicate that it is a good idea, but rather that this is a move that the financially illiterate historically have made, even during times of super low interest rates like the current environment that we are in. When approaching retirement, people still put their money in bonds when the market is falling because, well, because that's what people do. I suppose it is seen as a safe haven for their money given the tax benefit of bonds that money market accounts and CDs do not provide. That tax benefit and security probably starts to look pretty good when dealing with large sums of money and being so close to retirement. Maybe they have already made all the money that they need in their 401 or IRA and just need a safe, somewhat tax friendly place to put it.
    For the young however, it is an extremely stupid move. I have never owned a bond because I am somewhat young and I have yet to be in an environment where bonds pay an interest rate that is worth a flip. Even if they did pay well, I would not have a large % of bonds in my portfolio.

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