UnThreaded | Threaded | Whole Thread (22) | Ignore Thread Prev | Next
Author: BenHacker Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 35365  
Subject: Re: 10 year treasuries Date: 12/27/2013 11:23 AM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 1
RB,

Notice at the end of the article the guy says "People are not going to set up new positions right now based on this number,"
Why not? 3% guaranteed safe isn't bad, eh?


Just a note that the 3% is guaranteed rate of interest or coupon the bond pays. The other guarantee is that you will get your investment principal back (assuming you buy the bond at face / par) in 10 years.

The only issue is that unlike a CD, you have no guarantee of what you can sell the bond for in the interim. If interest rates go up 2% next year, that 3% won't seem so good, but you'll be stuck with it because your bond will drop >10% in value to compensate new owners for the new higher interest rate paradigm.

In the case of a CD you can pay a fee to get your money out, but that is not the case in the bond market... the market sets the rates and you take or leave them.

Most brokers should be able to buy treasuries directly. Just call them and ask how and what they charge in commission and/or spread fee.

Ben
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (22) | Ignore Thread Prev | Next

Announcements

Post of the Day:
Apple

Apple and Ninety Years Ago
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and "#1 Media Company to Work For" (BusinessInsider 2011)! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement