insurance on treasury bonds

[TrustUser]

hi, i could not find any forum that really suited my question, so this may not be the site for me to pose it. but i thought this might be the closest forum fit.

if the govt should go insolvent, or partially insolvent, would investors of treasury bonds just lose out ? or is there some other sort of private insurance ?

that would have seemed like a ridiculous question to me years ago, but it doesnt any more

i know my credit union is not insured by the fdic. they have private insurance, and each account is insured to double the amount of fdic insurance

with all the fraud and corruption in real estate trx, i am seriously thinking of just going with 30-year treasuries and be done with it. but it used to be that was completely safe. i am not so sure any more. thanks for the feedback.

 

[LdiJ]

hi, i could not find any forum that really suited my question, so this may not be the site for me to pose it. but i thought this might be the closest forum fit.

if the govt should go insolvent, or partially insolvent, would investors of treasury bonds just lose out ? or is there some other sort of private insurance ?

that would have seemed like a ridiculous question to me years ago, but it doesnt any more

i know my credit union is not insured by the fdic. they have private insurance, and each account is insured to double the amount of fdic insurance

with all the fraud and corruption in real estate trx, i am seriously thinking of just going with 30-year treasuries and be done with it. but it used to be that was completely safe. i am not so sure any more. thanks for the feedback.

In my opinion, if the federal government should go basically bankrupt, no investment would be safe. However, conventional wisdom is that you should never have everything in just one basket. You can still be conservative with a mixture of investments.

 

[adjusterjack]

if the govt should go insolvent, or partially insolvent, would investors of treasury bonds just lose out ?

If the US government every goes out of business the only real currency left will be bullets.

 

[Bali Hai Again]

hi, i could not find any forum that really suited my question, so this may not be the site for me to pose it. but i thought this might be the closest forum fit.

if the govt should go insolvent, or partially insolvent, would investors of treasury bonds just lose out ? or is there some other sort of private insurance ?

that would have seemed like a ridiculous question to me years ago, but it doesnt any more

i know my credit union is not insured by the fdic. they have private insurance, and each account is insured to double the amount of fdic insurance

with all the fraud and corruption in real estate trx, i am seriously thinking of just going with 30-year treasuries and be done with it. but it used to be that was completely safe. i am not so sure any more. thanks for the feedback.

You are seeking investment advice. No two people are going to agree on the same investment philosophy. That choice is ultimately yours. High risk can potentially mean high gains. If the US government goes bankrupt we are all in trouble!

 

[TrustUser]

thanks. not really seeking investment advice, though. just want to know what the exact specifics are of "guaranteeing" treasury bonds. if the govt did go insolvent, we would have a lot of problems. but i dont see how ownership of real estate would be harmed. in fact, it might actually be helped, as it would become way more popular. eggs in one basket is certainly a valid concern.

 

[TrustUser]

in doing a little more research, i dont think there is any other insurance on these bills. if the govt isnt able to honor the bill, it would become worthless. thanks again for the comments.

 

[adjusterjack]

in doing a little more research, i dont think there is any other insurance on these bills. if the govt isnt able to honor the bill, it would become worthless. thanks again for the comments.

US government securities are backed by the full faith and credit of the US government. That's your insurance.

You can buy them or not buy them. Up to you.

If you think bank accounts and/or CDs are safer just remember that the first initial of FDIC is FEDERAL. It's the US government that is ultimately the insurer of last resort.

 

[TrustUser]

i realize that fdic insurance is part of the federal govt, so that goes right along with treasuries

i still think owning real estate is the best investment, but there is a lot of involvement in it, that i dont really want any more

and i would not consider company stocks and bonds - that is really a crap shoot

i was hoping just to invest in 30 year treasuries, and be done with it - but our country is in such poor shape, that i dont know if i feel comfortable with that decision, either

 

[adjusterjack]

You could keep your money in your mattress.

Or do like my grandmother did. Wrap your money in aluminum foil and put it in the freezer.

Then you'll always have cold hard cash.

 

[Taxing Matters]

if the govt should go insolvent, or partially insolvent, would investors of treasury bonds just lose out ? or is there some other sort of private insurance ?

Treasury securities are backed by the full faith and credit of the United States. Absent some very severe (and very remote) circumstances there is no risk of default in the foreseeable future. Bear in mind that in the entire history of the United States it has never failed to pay a savings bond, Treasury note, or Treasury Bond. And that includes times of significant crises in our history, like the Civil War, various financial panics in the last half of the 1800s and early 1900s, the great depression, and two World Wars.

Our economy is not in dire straits right now, despite the hand wringing and bellows of worry you see on the internet. Except for the 2008 real estate debacle the U.S. has had a remarkable run of about a quarter century of economic growth, security, low interest rates, record stock returns, and record home ownership. Those are not the hallmarks of an economy on the edge of complete economic collapse. We've had in our history a number of periods far worse than we've seen lately and still the government was stable and did not default on its debts.

If things get even worse than those past events and the government is unable to raise the money to pay its debts then every other investment this country would likely also go bad. At that point we'd have greater problems than just the failure of financial instiutions not paying their investors, bond holders, and account holders. Even if insurance against loss in Treasury debt was available, IMO paying for that would just be wasting money. That insurer would be more likely to go out of business before the government collapsed. That's why even other nations buy our debt. Our debt is better than anything those other governments can offer.

Prudent investing generally includes a mix of investments to ensure you don't get burned by a loss in a single investment. A mix of very secure low interest federal government bonds & securities, corporate & state issued debt, stocks, real estate, etc. is the usual recommended way to balance risks and returns. So having some Treasury debt is not a bad thing. But if you put all your money into that, you'll be sacrificing the opportunity to invest in things that will produce much better returns.

 

[TrustUser]

hi tm, thanks for the encouragement. i wish i shared it with ya - LOL.

as far as better returns, that is not a big deal to me at all. i would prefer zero risk, and am happy with 4-5%. i wont spend the income i make each year from that, and i will eventually get social security on top of that. so safety is paramount, and i dont want involvement.

i have been involved with real estate all my life, properties and hard money lending. i did reasonably well, and have enough that i can afford to invest safely. and i dont want to be involved, like you need to be with real estate.

and there is tremendous amounts of fraud, now. it did not use to be like that. also, the loans today are nowhere near as good quality as i have been used to.

i know people who are worth at least tens of millions of dollars. and most of them spend 40 hours a week managing it. and for what ? so they can be worth hundreds of millions ??

i prefer to spend my time exercising, getting fresh air, and enjoying the simple things in life.

 

[adjusterjack]

as far as better returns, that is not a big deal to me at all. i would prefer zero risk, and am happy with 4-5%. i wont spend the income i make each year from

Then get a brokerage account with Schwab or Fidelity and buy CDs. You can buy from dozens of banks in one place, all insured by FDIC, and paying at least 5%. Varying maturities, short or long term.

That's what I've been doing, risk free.

i have been involved with real estate all my life, properties and hard money lending. i did reasonably well, and have enough that i can afford to invest safely. and i dont want to be involved, like you need to be with real estate.

Same here. I had a good run with rentals a few decades ago, then gave up the hassle.

i prefer to spend my time exercising, getting fresh air, and enjoying the simple things in life.

You live longer that way.

 

[TrustUser]

hi aj,

like you said earlier, getting cds at banks - i still have to rely on the fed, just like i do with treasuries

i have already looked into cds with various banks. and i have already contacted schwab, although i have not yet set up an acct

sorta in the process of learning about stuff. the main reason i had picked treasuries over cds is that i live in california. we are heavily taxed. even our sales tax is now over 10%. and treasuries are income tax-free from the state.

if our govt collapsed, i think real estate would become even more valuable. but i am so sick and tired of it. my outlook for our govt is not nearly as rosy as probably most of you guys.

i did find out for sure that there is nothing else backing federal stuff, except the govt. and that scares me.

thanks for all the replies. i just need to let things rest, until i make a decision.

up until a few months ago, i didnt realize you could get 1 year stuff in the 4-5% range. and then when i did some research, i find it is near a high over the past 30 years, so i thought it would be a good time to go 30 years. but the rate has fallen quite a bit in the past 2 auctions, and expected to fall more - LOL.

some of the hard loans are over 12%, as well. but agents arent always honest, and most of the loans have some real issues. and i am still dealing with this bankruptcy debacle.

i just may keep my cash in this privately insured credit union. i am debt-free, so i would never spend my money in my lifetime

 

[TrustUser]

You could keep your money in your mattress.

Or do like my grandmother did. Wrap your money in aluminum foil and put it in the freezer.

Then you'll always have cold hard cash.

LOL - i did not see this post of yours until right now. it may just be what i do !!

 

[Bali Hai Again]

My prediction is the US government will be solvent 30 years from now. We are still in the peak of high interest rates and they are predicted to decline “somewhat” in 2024. Look at what the markets did after the Fed meetings this month. Interest rates go up and stocks go down. Interest rates go down and stocks go up. Just a simple way to look at it.

If you sit on your pile of cash for the next 30 years, plan to lose more than half of its purchasing power.