The Bond Buyer’s Dilemma
The yields on long-term US Treasury bonds will likely fall below
inflation for years. Fortunately, some reasonable alternatives
strategies exist for investors.
A few bits and pieces from the opinion piece:
Are we in an era now when many bondholders are likely to experience
very unsatisfactory investment results? I think the answer is “yes”
for many types of bonds — and that this will remain true for some
time to come.
Artificially low interest rates are a subtle form of debt
restructuring and represent a kind of invisible taxation. Today,
the 10-year US Treasury bond yields 2%
He then goes on to suggest a few alternatives to Treasury bonds:
(b) foreign bonds in countries that have better fiscal balances
(c) blue-chip stocks with high dividend yields (ie. AT&T)
We’d add a few more alternatives to keep in mind such as high-quality corporates here in the US, and, for folks who are older, already retired, and perhaps living off of their portfolios, a portion of the income-generating part of their portfolio might be reasonably invested in an immediate fixed annuity.