Are Treasury Bonds a Safe Haven? | The Business Desk with Paul Solman | PBS NewsHour

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In the fall of 2007, when the U.S. economy first seemed in peril, I began answering reader queries here on the Business Desk. I still do so, but this page has expanded to include posts from eminent economists, "far-flung correspondents," and a variety of voices that have intriguing and/or useful things to say about economics, broadly defined. Please feel encouraged to respond to any and all of them.

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Are Treasury Bonds a Safe Haven?

Name: Anne

Question: Re: your recent interview with Nouriel Roubini on sovereign debt and the possibility of a U.S. government bond default, would inflation linked U.S. Treasury bonds be a safe haven?

Paul Solman: As I've written here before, TIPS -- Treasury Inflation-Protected Securities -- are my own hedge of choice: 50 percent or so of my family's entire retirement portfolio. They're a hedge against inflation and DEFLATION, actually, so long as you buy them directly from the government online or at or below their face value.

Go here to get started on learning about them in more detail. Boston University finance professor Zvi Bodie has also written extensively about TIPS online and in his book "Worry-Free Investing."

The family TIPS are held in mutual funds, by the way, since we never had enough non-retirement money to buy them directly. That makes them somewhat more volatile than if owned directly.

-- Posted June 28, 2010 | Comments ( ) | Permalink