Government Bonds
 

I am looking for a little better return. Whats the down side of
government bonds?

The soon to be......Inflation. (Plus--- further devaluation of our currency). T.I.P.S. are fine ..but the limit of $ amt. of purchases only covers a tiny amount of placements) We all realize that the TRUE inflation rate for 2010 was near 9%. BUT...by the MAGIC of the Washington D.C. elite--- we were told we had near ZERO inflation.( They simply CHANGED the product mix of what is used to determine the rate). Saved a ton of $$$$ from going to those on social security......

Getting into long term bonds is a risky business at this time. Most money managers believe interest rates will rise significantly in the not too distant future. When interest rates rise, bond prices will fall (including bond mutual funds). If you can get 3% on a 10 Treasury now and plan to hold it until maturity, and will not have heartburn if interest rates climb higher than 3%, go for it. That said, the feds will do everything they can to keep interest rates low. They are financing a large federal debt and each percentage point cost billions of dollars in interest payments. I usually adjust my bond/note to stock ratio as the market rises and falls. I have been buying stock for several years now in my retirement accounts. When stocks get too high I will switch back to buying bonds/notes.