this post was submitted on 04 Oct 2024
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A year ago we didn't know the market would grow so much, or at all.
Today we don't know if these trends will continue, stop, or even reverse. Past performance doesn't guarantee future returns, yada yada.
The whole point of bonds is that they be more stable and reliable than other securities. They're a useful tool for investors looking for stability.
A year ago, the expected annual yield on the NYSE was 6-8%. The treasury return for a year was 4%.
"I don't know if my plane will crash, so I drive everywhere in order to avoid that risk".
The expected yield on market investments is higher than the expected yield on treasuries. The real value in treasuries is their convertibility to cash, hedged against the risk of inflation. You are losing money long term if you are putting your retirement income in treasuries.
The point of low-yield low-risk bonds is that they can be quickly converted to cash when better investment opportunities arise. Alternatively, to be spent on consumer goods and services.