Uncle Sam will pay his bills, so if you own Treasury bonds you will get the interest and principal. By the start of this year bonds had become so expensive that 10-year Treasury notes (BX:TMUBMUSD10Y) sported yields (interest rates) of just 1.6%, 30-year Treasury bonds (BX:TMUBMUSD30Y) yielded just 2%, and all “inflation protected” Treasury bonds (VAIPX) were actually guaranteed to lose purchasing power, no matter how long you held them. Money managers will tell you that going all the way back to the 1920s, 10-year Treasury notes have produced an “average” annual return of 5%.

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