Investing in treasury bonds is a great way to balance your risk, by having a steady income, relatively risk-free.
Let’s learn about 5 things that make treasury bonds sort of a good investment.
1 – Diversification
We all know that stocks (if chosen correctly) in the long-term are one of the assets that give better returns.
But we don’t need to bet on only one horse. Investing is not a race and it is much safer if we diversify our portfolio into various assets.
2 – Almost Risk Free
You are basically lending money to your government, which ensures the payments usually quarterly or annually.
The capital is guaranteed unless your country goes bankrupt. So unless you live in a very poor place, investing in treasury bonds is almost 100% risk free.
3 – Compound Your Interest Rates
There are different types of treasury bonds (and series) which may differ in maturation, interest rate and so on.
Usually though, whenever you receive a payment, it compounds over your current capital, thus increasing your total capital for the next period.
You shouldn’t ignore compound interest, as it is a widely known but underestimated secret.
4 – Higher Interest Rates During Tough Times
Treasury bonds are usually linked to the raises made by the central banks in interest rates, such as Euribor for instance, meaning that the payout can be volatile.
Whereas raising the interest rates is usually a sign that the economy is not in a good shape, that doesn’t mean we can’t take advantage of it.
I currently invest in the Portuguese treasury bonds, because there’s where I’m from, but certainly that your country also provides some sort of investment.
5 – Helping The Economy Of Your Own Country Thriving
By investing in treasury bonds, you’re also indirectly helping the economy of your country, as you are proving money to pay its debt.
While it shouldn’t be your main motivation to invest in a treasury bond, I think you should definitely take this into consideration as well.
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