Bonds have outperformed stocks over the last 30-year period, but things are changing and bonds are no longer the safe haven they once were. In fact, bonds already look overvalued, and if rock-bottom interest rates keep moving higher, bond funds could plunge.
For the past several years, Social Security's Trustees have been warning of the accelerating depletion of its Trust Fund. Since 2008, the Trust Fund's out-of-money date has inched forward from 2041 to 2033. Unfortunately, even that projection is a bit too optimistic.
Interest rates have never been lower: That's good news for borrowers, bad news for savers unwilling to take much risk to grow their money. However, there's one safe option many people ignore that has become attractive again -- savings bonds.
Low interest rates have made life a lot easier for many borrowers struggling to make monthly payments. But for retirees, who have to live off their portfolios, low rates have caused huge problems.
The U.S. is again closing in on its debt limit, and if a recent statement by Republican Speaker of the House John Boehner is any indication, another fight with the Obama administration over the issue is ahead. Here's a preview of what we might expect.
The debt ceiling debate is raging inside the Beltway, but many Americans are tuning it out. And among those paying attention, a majority would ignore the consequences and let the U.S. default. Find out who they'd chose to stiff first -- and tell us who you think the country shouldn't pay if it has to skip out on some of its obligations.
Even before the International Energy Agency and the White House announced they were releasing billions of gallons or oil from fuel reserves, gas prices were falling. In the past two weeks, a gallon is down more than 11 cents. Also falling -- hopes for the euro, and the outlook for U.S. Treasury bonds.
Even the phrase "debt ceiling" sounds like something too far removed from daily life to be of much interest. But ignoring the political battle over this issue would be a mistake: How the government handles the nation's debt limit will directly affect our personal finances in all sorts of important ways.
Fear is in the air on Wall Street. Unemployment is high, housing sales are sluggish and the dollar is weak. Now, to add insult to injury, Standard & Poor's has lowered its U.S. debt outlook to negative, putting the nation's AAA credit rating at risk. Fortunately, smart traders can benefit from these worries.
It's true that Social Security paid out more than it collected in 2010. But the Trust Fund owns $2.6 trillion in Treasury bonds, and though some people may claim those holdings are an illusion, they aren't. Still, there are some fairly painless steps we could take to shore up the program's balance sheet for the long term.
After respected banking analyst Meredith Whitney rattled the municipal bond market with her prediction of hundreds of billions of dollars in muni defaults, small investors dumped the bonds. That dire prediction may yet come true, but there are a few types of munis that still carry virtually no risk.
The economy has had more than its share of trouble lately: Japan's earthquake comes on top of rising oil and food prices, political turmoil in the Middle East and a crop of government austerity measures. But investing opportunities lie hidden behind the bad news.
When a Federal Reserve committee meets Tuesday to consider the federal interest rate, it will likely revise its glum outlook into something brighter. But will it also acknowledge the U.S.'s growing inflation problem?
The technical signs suggest we're at a crucial point for stocks: Either a decisive rise or a dramatic fall is coming. And if you're the type to dismiss technical analysis as unscientific voodoo, you're missing the point: It's not about pattern matching, it's about human psychology.
He may be one of America's richest men, but should small investors try to do what Berkshire Hathaway's legendary CEO does? Some analysts say no: The "Warren Buffett way" often doesn't translate to what's best for individuals, especially today.
One would think that with the Mideast crisis, oil prices skyrocketing and U.S. manufacturing rebounding smartly, the buck would be flying high. But no. Why that's so may lie in international perceptions about where interest rates are heading.
U.S. bond prices fell Wednesday on violence in Libya. An auction of $35 billion in five-year notes met with little demand, while 10-year Treasury prices fell 22 cents per $100 invested. Stocks also declined as a result of the Libyan instability.
The Treasury has to find buyers for trillions of dollars in new bonds needed to fund the federal deficit. It hopes average citizens will pony up and invest in some $337 billion worth. But for a host of reasons, "safe" T-bonds might not be a winning investment for you.
As small investors flee the low returns of Treasury bonds, many have piled into high-yield debt -- also known as junk bonds. Problem is, as one pro puts it: "The trade when you could buy anything and make money ended six months ago." Investors need to be far pickier now.
Washington has been borrowing Social Security's surpluses for decades and issuing IOUs in return. However, the ability to pay those IOUs depends on the Treasury borrowing more money on global bond markets at affordable rates. That's hardly a sure thing.
For investors, fear of losing money in the stock market is finally giving way to the reality that they may actually be losing money in low-yielding investments. So the move back to stocks is underway. But the key is do so safely. Here's some timely advice.
When pros like Warren Buffett and Goldman Sachs start making moves predicated on the expectation of higher rates, investors best take note. The impact of higher rates would be widespread, especially on so-called safe havens like Treasury bonds and gold.
Doomsayers insist the recent rapid rise in yields means the nation's creditors are finally getting fed up with financing U.S. deficits. But a stronger argument says the cause is better-than-expected economic reports that have been piling up recently.
While the U.S. struggled with near-10% unemployment, China grew at that same pace over the past year. But the country faces massive internal problems that leave it in a far more difficult situation than the praise constantly heaped on it implies.
Republican leaders may be worried about the Federal Reserve's second round of quantitative easing, but the stock and credit markets are delighted: They've improved significantly since the plan was announced. But can the rally be solely attributed to QE2?
A rapidly growing list of reports shows a U.S. economic recovery that's far stronger than most had anticipated just months ago. And both deflation and inflation seem less likely to explode. All this is boosting the dollar -- and could soon dim the gold bugs' argument.
U.S. mortgage rates have grown for five straight weeks, in the last week hitting their highest levels in seven months. Ten-year Treasury note yields have been climbing on inflation concerns, driving the higher rates.
Some investment strategists say it's unwise to "fight the Fed." And right now, Chairman Bernanke wants investors to move into riskier assets, particularly stocks. But these strategists also point to pitfalls if investors aren't careful about how they shift assets.
For the 22nd-straight month, the central bank kept its target interest rate at 0% to 0.25%. It made no new asset purchases and no changes to QE2, its $600 billion, eight-month bond-buying program. Housing and hiring are two main areas of concern in a slow-growth economy.