There are no safe bets for investors anymore.
In recent months, a growing number of pundits and investors on Wall Street have expressed concern that the bond market, long considered a secure place to put one’s money, may be a bad investment going forward.
Treasury bonds in particular have hit new lows, with two-year notes dropping to a record low yield of .49%, while 10-year notes have a yield of just 2.52%, the lowest since March of last year, and just shy of the low that bonds hit in 2008 after Lehman Brothers collapsed.
Yet despite this, many Americans are flocking to bond funds, and U.S. Treasury bonds in particular, because they are concerned with the instability of the stock market and willing to pay more money on average to buy them. In fact, according to the Investment Company Institute, a whopping $46 billion has been removed from the stock market since May, when there was a brief market crash. Also, $77 billion has been invested into bonds during that time period.
Last week, the Wall Street Journal published a feature proclaiming the beginning of the Great American Bond Bubble. “Those who are now crowding into bonds and bond funds are courting disaster,” the Journal reported. The Journal explained that yields are currently too low for investors to make much, if any, profit at all and may actually lose out compared to investing in “stocks paying high dividends.”
However, the stock market is far from being a safe bet, either. As TheStreet.com reported recently, some are speculating that the stock market could suffer a crash in the not too distant future. In particular, TheStreet focused on the stock market crash predictor known as the Hindenburg Omen, which uses a set of technical data to determine the fate of the market. So far, the stock market has already signaled two Hindenburg alarms, including the realization that the stock market has had positive gains less than half the time during the past month.
And it’s not just stocks and bonds that have investors up in arms.
According to the New York Times, many analysts now speculate that real estate has lost most of its shine as an investment option, as it will “never again” lead to the kind of cash flow that it did last century. “A home will return the money an owner puts in each month, but will not multiply the investment,” the Times reports.
So what options are left for the average American who wants to invest money in a relatively safe fashion?
“For those investors that seek safety and lack confidence in the stock and bond markets, they should consider fixed annuities from a highly rated insurance company with strong guarantees that eliminate the possibility of losses,” says Dave Huber, president of Huber Financial Group, an investment firm.
With fixed annuities, investors have the option to pay a set amount up front or in installments, and they are guaranteed to make a fixed amount of returns that does not fluctuate with the market.
One of the best insurance companies to purchase these annuities from, according to TheStreet.com, is the Teachers Insurance and Annuity Association. For more information about these annuities, check out this article.
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