Treasury Bonds Don't Tap Dance
Bonds don’t tap dance. There is nothing sexy or flirtatious about bonds. They are low, slow and share their joy only a little at a time over the long haul. If you want a relationship that fulfills its promises and serves you well year after year, buy bonds. Bonds are a good marriage, not a summer fling. Read on to find out how American Treasury bonds, once the most secure asset in the world, changed from a society matron to a bar floozy. When you buy a bond, you are loaning the issuer money. Like all loans, you expect to be repaid the full amount, plus a little extra, called interest. Interest is the price we pay for money. With bonds, that interest is called yield. Treasuries are sold for less than their face value, the difference between the price and par, being the yield, or interest. For example, if you buy a $10,000 note, due in 10 years, you might pay $9,500 for it. During those 10 years, the government uses...