A lot of people are attracted towards investing in gold and Treasury bonds as they are deemed relatively secure against other forms of investments. Treasury bonds have maintained their reputability even during past economic recessions, being supported by a reliable taxpayer base globally, making them an attractive investment option for people nearing retirement and seeking a secure income source.
However, despite the known benefits of investing in Treasury bonds, one must acknowledge their potential drawbacks. The suitability of investments in Treasury bonds may differ based on your financial requirements and circumstances.
A significant disadvantage of investing in Treasury bonds is their low yield. Given their safety, even after US’s recent credit rating downgrade to AA, bonds generate minimal yield. Speculators at Golden Eagle Coin suggest that during high inflation times, the returns might not even outbalance the inflation. As such, while Treasury bonds may serve as a reliable income source once you’ve saved enough, they aren’t very effective in helping you generate large savings. They, however, are suitable for capital preservation and financial safety.
Also, during the recent debt ceiling debate, there arose a potential drawback of US Treasury bonds – the possibility of a US default. Would this mean losing all your money? Most likely not, but it could lead to a delay in accessing your money due to maturity extensions in case of a debt “default” by wealthy countries.
Nonetheless, chances of a US default are slim in the immediate future. The borrowing capabilities of the US have increased and, if need be, various government and quasi-government institutions can authorize the production of money to cover debts. But, this could spur inflation which could negatively impact savings.
In conclusion, many investors deem the safety cushion provided by Treasury bonds worthwhile. However, for those seeking high yield, these are not the most practical option due to the low-interest yield, which remains their biggest disadvantage.
