Are Treasury Bonds a Safe Haven?
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.