• UnderpantsWeevil@lemmy.world
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    2 months ago

    The DOW grew 25% over the last year.

    The S&P grew 30%

    The NASDAQ grew 35%

    What are you doing buying 8% Treasury Bonds?

    • Zoidberg@lemm.ee
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      2 months ago

      Exactly. But keep in mind that those are different things. Treasury bonds carry very little risk of losing money whereas investing in index funds/ETFs can lose you money.

    • doggle@lemmy.dbzer0.com
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      2 months ago

      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.

      • UnderpantsWeevil@lemmy.world
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        2 months ago

        A year ago we didn’t know the market would grow so much, or at all.

        A year ago, the expected annual yield on the NYSE was 6-8%. The treasury return for a year was 4%.

        Today we don’t know if these trends will continue, stop, or even reverse.

        “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 whole point of bonds is that they be more stable

        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.

        • doggle@lemmy.dbzer0.com
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          2 months ago

          Who said anything about retirement?

          And if you know why people buy treasuries then why did you ask?

          You’re using hindsight to pretend like there’s no reason to buy treasuries while also demonstrating an understanding of why people do. You’ll forgive my confusion.

          Also, the NYSE had an expected return of 6-8%. That was not at all a guarantee; we didn’t know that. My statement holds true.

    • toddestan@lemmy.world
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      2 months ago

      On the other hand, If I can get $20k a month with one of the safest investments around, I’m not screwing around with the stock market.

      • UnderpantsWeevil@lemmy.world
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        2 months ago

        If I can get $20k a month with one of the safest investments around

        8% Treasuries don’t exist. The current treasury rate is closer to 4.5% during a period of 2.5% inflation. Higher treasury rates tend to be paired with higher Fed Reserve rates, which tend to occur during periods of high inflation. So the hypothetical 8% Treasury will only be available during periods of 5%+ inflation anyway. You’re still only netting real gains of 2-3%.

        Its a safe hedge against a downturn when you only care about preserving your liquidity. It’s a real risk when you consider the possibility of a bull run. You’re effectively losing money when equities surge while you’re setting on a cash-convertible.