Are Bonds Good Investments Right Now?

Now is an awful time to buy long-term bonds. The interest rates are currently less than 1%, which means that they are much more likely to be higher five years from now than they are today. I certainly wouldn't bet that interest rates will be lower in 2015 than in 2011. Of course, if you're near retirement, or if you're looking to allocate part of your assets to the 'safe compartment' of your overall savings, then you might want to buy bonds even if the rates aren't all that great right now.

One of the better deals out there available to investors is I-bonds issued by the federal government. You can purchase them at face value, and they are guaranteed to never fall in value, and you earn an interest rate determined by a fixed rate and the inflation rate as measured by the Consumer Price Index. Right now, that rate gives you interest between 3-4%. That's pretty good, considering the interest rates on other safe alternatives yield a paltry 1-2%. Most likely, as the United States continues to inflate its way out of the debt, the savings accounts will yield more, but unfortunately, that will be offset by the fact that goods will cost more to buy. To read a good article on the pricing of bonds, be sure to check out this article over at Michael James Money: http://michaeljamesmoney.blogspot.com/2011/07/bond-misconceptions.html .