By Bill Broich
Investing options for 2014 seem like looking into a fog bank. You think you can see objects in the fog but then suddenly the objects are gone. Should you buy stocks? Bonds? More real estate?
The current state of the world economy is about as volatile as it has ever been since WWII. Many investors have run to safety and made huge purchases in the only one really safe vehicle available-US Treasuries.
Buying Treasuries is definitely a safe investment option….or is it? It is true that US Treasuries carry no risk, no risk in your investment being lost. However, there is another risk associated with investing in US Treasuries.
Risk? Yes. The risk is if you need your funds before the end of the US Treasury maturity date. Treasuries are sold for specific time periods. As an example, a US Treasury bond which has a maturity time period of 30 years. What happens if you need the funds prior to the 30 year term period? What if you need the funds in 5 years? 10 years?
The value of US Treasury bonds will adjust (should you decide to sell) with the change in general interest rates, as interest rates in general increase, the value of US Treasuries will decrease. The opposite is also true, if interest rates decrease then the value of what you could sell your enforce US Treasury bond would increase. If you hold your US Treasuries until maturity, your entire investment will be returned, guaranteed.
Are there other options for investing in low risk assets? Yes.
Consider buying annuities from an authorized insurance company. Annuities generally pay a higher interest rate higher than Treasuries and can be for shorter time periods, plus the terms can be as short as 3 years.
There is more than one way to buy assets without excess exposure to risk—consider fixed interest rate annuities as a viable option.
For more information regarding US Treasuries, here is a link: http://www.treasurydirect.gov/