America's Fastest Growing
Independent Financial Advisory Network
A Nationwide Network of 100%
Independent & 100% Objective Fee-Only Financial Advisers
The-Adviser.com The place to come for answers | ||
How can a T-Bill be risky? By The-Adviser.com - |
||
SERVICES WHY US |
New York -
Millions of investors keep money in T-Bills
because they believe there is no risk. This is not true. Although the government of the United States can technically go bankrupt - the real risk in owning these investments is that the after-inflation returns that you earn on your investments can be extremely low. Thus, there are opportunity costs and a real risk that your returns during your term of ownership may not keep pace with inflation. The real interest rate on a fixed income investment such as a T-Bill is based on the nominal or stated yield less the inflation rate. Thus, if your T-Bill is earning 5% and inflation is 3%, your real interest rate return is only 2%. Of course, all securities, whether stocks or bonds bear this risk. The benefit of owning stocks and bonds is that there returns are historically higher and the base inflation rate of 3% would still apply. If you are holding your money for extremely long-periods of time, investing in T-Bills can be risky because you may lose purchasing power. About Us |
T-Bills have inflation risk. Got an investment question?
Open a professionally managed account:
Hire
The-Adviser.com Financial Advisory Services |
You don't need to be rich to hire a Financial Adviser. Just Smart |
||
The
Independent Adviser Corporation is a Registered Investment Adviser that
specializes in helping individuals, families and businesses develop
investment and financial planning strategies. Do you have a question about your investments? |
||
|
1-800-ADVISER
America's Independent-Adviser.
© Copyright.
The Independent Adviser Corporation. All rights reserved. Important Legal Information