How would you like a 30-year partnership with the U.S. government where you get paid 2.82% a year? Ugly, right? Well, that’s the current yield on the 30-year Treasury bond. As you can see, it doesn’t get much worse than that.
For your trust and generosity, the government “guarantees” you a yield of 2.82% while it gets to use your hard-earned money to pile on more debt, devalue your existing dollars, and/or tax you more—take your pick.
A better deal might be to partner with blue-chip stocks that pay you a dividend of around 4% a year. That’s a 42% increase compared to the 30-year Treasury. And with the right mix of dividend-paying stocks, you should have dividend increases year in and year out, while with the 30-year Treasury bond you’ll be worried about inflation year in and year out.
It’s no easy task crafting a dividend-centric portfolio that can stand the test of time. You want the freedom to own some of the best companies in the world. It’s too bad that at some mutual fund and exchange-traded fund companies, the legal department puts out pages of prospectuses that limit where they can invest.
Note how well Young Research’s Retirement Compounders have done. It’s hard to argue the value of freedom.