Do savings bonds still have a place in my financial portfolio?

Q: Do savings bonds still have a place in my financial portfolio?

--Curious Investor

A: Dear Curious:

Savings bonds, also known as Treasury bonds, can be a valuable tool in your financial portfolio.  When you buy savings bonds, you are essentially loaning money to the U.S. government.

They can preserve principal, diversify your portfolio, and be a safe place to save your money. To get the most benefit, ensure that you understand the nature of the bonds you’re buying, and always know the value of your bonds before they are cashed in.

Many government-issued savings bonds are as close to risk-free as an investment can get, but they may not keep up with inflation, effectively losing value over time. In most cases, avoid junk bonds, which can place your valuable principal at risk.

Bonds can help diversify your portfolio, reducing your overall risk in times of market downturn. Contrast this with investments in the stock market, in which you are investing in a company’s equity. The stock market can be volatile, and bond investments can help stabilize your overall portfolio.

Bonds can be purchased regularly through many employer payrolls using the TreasuryDirect program, and they may be given as gifts to young people.

If you’d like to ensure that you can meet your future financial needs during life and beyond, schedule a Family Wealth Planning Session.™ A Personal Family Lawyer® can review your existing plan and help you make adjustments that will help you achieve your goals.