How safe is investing in Treasury bills & it will return good money in future guaranteed?
Posted by admin in Finance Tuesday, 13 September 2011 07:55 3 Comments
How safe is investing in Treasury bills & it will return good money in future guaranteed?How much highest interest rate we can get?
Treasuries are safe investments but it depends on your horizon. These bills or bonds change in value based on market conditions. So if you plan on buying a 10 year bond today (yielding 3.3% today) and sell 6 months from now. You can end up with a loss. If you want guarenteed, I suggest going to your bank and buying a certificate of deposit.
If you are willing to hold for 5-15 years. Ask you broker abt investement rated tax free munis. Same thing as T-bills but you are lending to the state and you can yield 5-6% tax free. (depending on the state)
The biggest risk to bonds right now is inflation risk.
The longer the term of the bond the greater the inflation risk.
Some believe that a strong dose of inflation will hit us at some point in the next couple of years. If they are right then, though you principal is safe, the market price of you bond and its eventual purchasing power will go down.
They are considered safe. Their return is not all that great currently.