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Treasury bond mutual funds

By Terry Savage on April 28, 2019 | Chicken Money

Hi Terry, I’ve been exploring the”TreasuryDirect.gov” site that you recommended. I also noticed that “Fidelity” offers short, intermediate, and long term treasury bond index funds. Are these the same products and if so is there any advantage or disadvantage to going this route?
Thank you for providing any clarification on this.

Terry Says

the purpose of TreasuryDirect.gov is to offer individuals access to the very short-term Treasury bills, notes, and bonds.  You get to schedule your purchase dates and maturities.  A fund offers more liquidity, because you can sell at any time.  But in a rising rate environment the yields may lag a bit, as they must wait to reinvest the securities they hold — or invest new money coming in.

And remember, with longer term bonds (10 years or more) you’ll see bond prices fall if rates rise. That means you could lose a bit of your principal if you sell a mutual fund in a period of rising rates.

 

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