Why Should you Invest in government securities bonds?
The ever-increasing uncertainty economies around the world and the growing stock market volatility has pushed many retail investors to look for low-risk assets such as 90 day treasury bill and other government security bonds. Buying term deposit is one of the most popular types of investments for this type of investors, in this category. However, it should also be kept in mind that term deposits are nothing but IOU offered by the bank and there is always a risk if the bank becomes bankrupt.
If you want to make the safest investments, you should buy treasury bonds. Even though the rate of interest may be low, but they are the safest debt instruments sponsored by the government. According to financial experts, the rates for these instruments can go high gradually, even when the economy is entering a deflation mode. And, the best thing about a 90 day bond rate is that they are compounded on a daily basis.
It is projected by economists that most of the assets are going to lose majority of their value while unemployment rates are going to shoot up by 2016. And, the U.S. Dollar is going to get the longest bull market in a long time. In such a scenario, it would be best to consider government securities bonds as the safest form of investment options.
According to experts, bonds and deflation are going to create a thrilling investment scenario because of the highly volatile environment in terms of interest rates in the coming 10 years. You would be making a wise decision to get them at a time of high interest rates when no one would want to have them. And, you would be getting the safest and the best bonds. If you purchase the bonds of a company and it goes out of business, you are losing your money, but the federal government is always going to remain in business.
Currently, the current 90 day bank bill rate is the safest place where you can make your investments. It is possible to purchase them directly from the Treasury and then re-purchase them every 90 days.
These government securities bonds are usually auctioned in larger blocks that can be worth millions of dollars, where the buyers are institutions. However, you can purchase them through brokers or you can get exposed to these government bonds by purchasing mutual funds.
Before you buy treasury bonds, you must know that they have a variety of risk and rewards in comparison to term deposits. They have lower risks such as default relative to term deposits, but the price can fluctuate unlike the term deposits. This means that you can generate capital gains or losses from your investments along with the income from the interest. It has always been that the demand for current 90 day bank bill rate always go up when there is uncertainty in the market. Therefore, these government bonds are your best bet under any market condition, whether it is going down or up.
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