The Risks Lurking in Treasury Bonds

The Risks Lurking in Treasury Bonds

September 14, 2011, 11:11 am

How's this for an investment opportunity: a guaranteed yield of 3.2 percent, with an enormous potential downside. As risky as that sounds, millions of investors are moving money into Treasury bonds as a "safe haven." In early September, the yield on the 30-year Treasury bond sank to a new low of 3.2 percent, while the 10-year note fell to 1.9 percent. If the inflation rate stays anywhere close to its current modest 3.6 percent pace, long-term investors will be guaranteed to lose money after factoring in inflation's toll.