Touch Long-Term Bonds and Your Wealth Gets Blown to Pieces!
TLT has returned only about 4% a year over nearly twenty years, and anyone who bought the 2020 peak has watched it slide from 164 to 85. Avoid long-term, corporate, junk and structured bonds; the only ones to hold are short-term funds such as BOXX, SGOV, BIL and Taiwan's 00865B.
Only 4% annualized over twenty years / a 50% crash from the peak: the real trap
Let me say this clearly to everyone: if you invest in a Nasdaq 100 index fund, do not invest in bonds.
Look at TLT, the twenty-year Treasury fund. From 2002 until now, close to twenty years, this Treasury fund has not gone up. The dividend is around 4%, so over those twenty years your annualized return has been only 4%. And even that assumes you bought at a low.
If you bought at a high—say at the very top back in 2020—let me do the math for you. From that peak until today you went from 164 dollars down to 85 dollars. Cut in half.
So bonds carry a great deal of risk. Just look at how long it has been falling, and falling. From 2020 it fell for five years, six years, seven years, and after seven years it still keeps falling.
You say bonds are safer? Bond risk is very high. Be careful. Do not touch long-term bonds. Do not touch long-term bonds. I will say it again: do not touch long-term bonds.
Still less should you touch corporate bonds, junk bonds or structured bonds. It makes no difference whose bond it is—a giant company like Apple, or Nasdaq—do not touch any of them. The moment you hear the word bond, stay away.
The only bonds you can touch are short-term bonds. In the United States that means BOXX, or SGOV, or BIL; in Taiwan it is 00865B. Nothing else. Touch a bond and you have touched a bomb: it blows you to pieces, and in the end not even your wandering ghost can be found.
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Written by: James
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