The good news is that Treasury bonds (T-bonds) are guaranteed by the U.S. UU. They can be good investments for those who are about to retire or are close to retirement, as well as for younger investors looking for stable returns. Bonds are debt securities issued by companies and governments to raise funds.
Treasury notes are issued by the United States Government and are considered to be one of the safest investments in the world, so risk should never be a significant deterrent. However, the yield on Treasury bills is usually quite low compared to other types of securities, such as stocks, bonds and mutual funds. Bonds are less likely to lose money than stocks. Therefore, buying some bonds and stocks can reduce your portfolio's losses during stock market crashes.
Bonds pay interest regularly, so they can help generate a consistent and predictable income stream from your savings. These bonds usually pay lower returns than comparable taxable bonds, but they can provide higher after-tax income to investors who are at high tax levels. For more information on tax considerations, see How are bonds taxed? We believe that I bonds are an excellent addition to your emergency fund, money market, CD and traditional savings account. However, be careful not to use them as a total replacement for your basic retirement savings.
Since the worker is better able to absorb market fluctuations over the next few decades, there is very little reason to invest in Treasury notes for retirement. In the case of Treasury bills, the opportunity cost of investing is expressed in the unrealized returns that could be obtained elsewhere in the market. In this case, the bond would be sold at a lower price than par, which would generate a higher return for the investor than the coupon rate would indicate.