investing

Inflation-fighting alternatives to I bonds

Treasury mutual funds, ETFs can be viable options
Next
2 of 9
Back
text

Mutual funds and exchange-traded funds, or ETFs, tied to Treasuries are baskets of short- and long-term Treasury bonds.

The upside: Treasuries are backed by the full faith and credit of the U.S. government, so investors don't have to stay up nights wondering if they'll default. Also, because their value tends to go up when the economy is struggling, they tend to move in the opposite direction of stocks, providing a useful counterweight in your portfolio, says David Loeper, chairman and CEO of Wealthcare Capital Management in Richmond, Va., and author of "Stop the Investing Rip-Off."

The downside: Treasuries rarely realize high yields, but right now yields are particularly low while prices are higher than normal.

If interest rates go up quickly, the value of long-term Treasuries can nose dive, says Richelson.

Bottom line: For long-term investors, Treasury mutual funds and ETFs offer a viable option for a portfolio's fixed-income component that outperforms inflation and protects investors in crises, says Loeper.

"Whenever we've had a major decline in equities, there's a flight to safety," which causes Treasuries to increase in value, says Loeper.

Just be sure that any fund or ETF you buy has a low expense ratio and low fees, he says.


 

 

advertisement

Show Bankrate's community sharing policy
          Connect with us
advertisement
advertisement

CDs and Investment

Can heirs cash an old trust?

Dear Dr. Don, The youngest of 6 children, I am 48 years old. My father joined the Navy at 22. In Italy, he met his bride and my mother, and returned to the U.S. to raise our family. In 1959, he bought a trust certificate... Read more

advertisement

Blog

Mark Hamrick

Market takes a bite out of Apple

Apple, among a group of four companies dubbed "FANG" by CNBC's Jim Cramer, has seen its shares decline sharply after reporting its 1st drop in quarterly revenue in 13 years.  ... Read more


Connect with us