30-year Bonds, Then & Now
A financial Rip Van Winkle who awoke from a 30 year sleep this Fall would be suffering from vertigo, for a variety of reasons.
Reason #1: the 30-year U.S. Bond they purchased in Fall, 1981 would have just matured.
Instead of collecting a risk-free 15% the last 30 years — perhaps the all-time best investment in the history of fixed income — they would be getting their principal back in an era when the equivalent bond now yields something like 3%.
And the financial strength of the U.S. government backing it is a lot more questionable (back then, the issue was inflation).
It’s a high quality problem to have, no question, but figuring out where to profitably stash your savings is a real conundrum these days.
P.S.: Imagine what the purchaser of today’s 30 year bond will confront in . . . 2041!