Not So Fast...

The U.S. may offer a 50-year Treasury... but don't tie up your cash just yet.

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Should You Buy a 50-Year Treasury? Karim Rahemtulla, Options Strategist, The Oxford Club Bill O'Reilly Did What?!? Bill O'Reilly is no stranger to controversy. The mainstream media LOVES bashing him. And they might just have a field day with this. Because Bill is releasing his most controversial project yet. See what it's all about right here.

Editor's Note: In today's piece, Karim explains why investors should be wary of long-term maturity Treasurys. Experienced investors know that there are no givens in the market - except for sell-offs and inflation, that is. Tying up your money for half a century at 2%, Karim argues, is one of the worst financial decisions you can make. That's because today's investors have a wide variety of options to benefit from security while still earning competitive returns. The corporate bonds that Bond Strategist Steve McDonald recommends, for example, can net 154% gains in less than one year. Feeling secure shouldn't have to come at the cost of cementing in losing returns. This market has potential for profit regardless of where stock prices go next - watch Steve's recent presentation and see for yourself. - Mable Buchanan, Assistant Managing Editor With global interest rates heading lower in a charge led by Europe and Asia and followed by the United States, it's time to jump on the U.S. long bond (30-year) and lock in that juicy 2.33% yield... Of course, I am joking. The last place you should ever put your money is in a 30-year bond yielding 2.33%.

Worse, there is talk of a new 50-year Treasury that could be issued as early as next year. That's another one to avoid. Unless you are the U.S. government, a lower interest rate environment is not good for you. When investing in a 30- or 50-year bond, especially at these levels, what you are essentially saying is that you cannot find another place to safely make 2.33% a year for the next 30 years! With inflation running at 2% today (and probably more than that unofficially), you are losing ground every day and locking in future losses. Government bonds have only one thing going for them, and that is safety. There is no safer investment than a U.S. Treasury. After all, if the U.S. goes down, it doesn't matter much what else you're holding - cash, real estate or gold - they will all crash. We don't live in a gold standard world, but a fiat money world. That means we create money out of thin air and back it with the full faith and credit of the U.S. Treasury. And because the U.S. dollar is the world's reserve currency, the failure of any part of the U.S. monetary complex would result in a global monetary catastrophe. Gold may seem like a great alternative until you head down to the local grocery store and try to cash in half an ounce... and expect change. My colleague and friend Steve McDonald is Wealthy Retirement's bond expert, and he recommends holding a bevy of bonds that are shorter in duration and yield much more than the 30-year bond.

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So which sounds better... 2% returns from a sinking Treasury or 154% gains from a portfolio of strategically chosen corporate bonds? I know which I'd rather see in my brokerage account... You can read more about how Steve scores Treasury-beating returns here. Following Steve's strategy is imperative because - and mark my words - when the 50-year bond is issued, it will likely pay just a fraction, maybe 100 basis points, more than the 30-year bond. Do you know how many business cycles we will see in 50 years? Even the stock market with its ups and downs has proven to return more than 9% annually over 50 years, and that is with full risk! The longest duration you should look at is 10 years or less. With market and business cycles changing so rapidly compared with the past, you must be nimble with your cash. Tying it up for 30 or 50 years is the opposite of nimble! Yes, stocks do go down, but they also go up. And the returns from the stock market have dwarfed the return from every other type of financial asset over time... even if you bought in at the exact wrong time! There are multiple products out there today, from preferred stocks to common stocks and certificates of deposit (CDs), that will give you a better return. And if you want to venture a little bit further into the market, you can try covered call writing, a very conservative options strategy that can also deliver bigger gains. Keep on the lookout here at Wealthy Retirement, and in my new e-letter Trade of the Day, as I walk you through it every step of the way! Good investing, Karim P.S. Steve's bond strategy is so profitable that he's been able to give up stocks altogether. Click here to learn more about how to score the security of bonds while still staying competitive with the stock market.

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