In a bull market, most investors are excited about chasing risks. Despite the high valuation, there are still bigger bets that double, hoping to achieve huge returns. That’s human nature. No one wants to miss the boat, everyone thinks they can surpass the market.
In the process, boring assets such as risk-free Treasury bills are usually pushed aside. After all, when you can use private AI startups or the latest growth stocks, dear guy, who wants to buy government bonds?
But here’s the thing: I’ve been investing since 1996 and I’ve gone through multiple cycles of prosperity and savage. Just when you think you won’t lose, sometimes you lose. The market brings a rebound just when you are sure that good times will never come back.
The real key to becoming a successful DIY investor is not finding the perfect stock, but having the discipline to maintain your asset allocation. If you can lower your mood swings and stick to your investment plan, you will build more wealth in the long run rather than you keep chasing FOMO.
This has brought me to a point where I am often overlooked: Treasury bonds can also be appreciated. Don’t sleep on them.
Why should Treasury bonds get more respect
In the previous post, I talked about how the output of 20-year bonds is attractive to retirees or anyone who is already financially independent and doesn’t want to trade in currency. Google News even took over it, but the reaction was lukewarm. Most readers are not interested because it is a bull market. When stocks are higher, no one wants to hear about bonds.
But as a semi-retired and disciplined asset allocator, I find any risk-free returns over 4%, which is very attractive. Think about it: I believe that even if the maximum withdrawal of the maximum withdrawal is 2%, I believe in a safe evacuation rate of 4%. If I can earn 4% without touching the principal, I essentially guarantee my financial security for my life. This kind of peace of mind is priceless.
It also means that if my kids end up being rejected by college and can’t find a job, they still inherit a lot. The worst part is that they can sit and play video games in the paid home I bought for them before they were born. Not ideal, but at least they won’t starve to death.
Because I practiced my sermons, I bought $150,000 worth of 10-year Treasury bills on the secondary market at the end of June. I would love to lock 30% to 40% of my taxable portfolio into souvenirs, at least 4%. This gives me a stable basis for risk-free income while still leaving 60-70% of the portfolio available for venture capital investments like stocks.
In context, my wife and I depend on funding our lives as dual unemployed parents. Stability and income are priorities. For me, it’s the ideal setting for retirement.
Neglected free “call options” in bonds
When most people think of Treasury bonds, they imagine cutting coupons and getting their principals to mature again. This is exactly what happens – your income is stable and your default risk is zero. That’s why they are called “risk-free.”
But this is something many investors forget: Long-term fiscal bonds come with Free call options.
If interest rates drop, the market value of your bond will rise. You haven’t have For sale, but you can choose. This flexibility is powerful.
- Stay mature → Collect coupon payments and get all the money back.
- Sell before maturity → If interest rates drop, it is possible to lock in capital gains.
This makes long-term souvenirs a one-to-one investment: if interest rates drop, you will gain steady income and upward potential.
My Treasury Bonds in Action
The $150,542 worth of 10-year souvenir I bought in June 2025 has already been worth about $154,529, with a yield of 2.64% in just two and a half months as Treasury bond yields have fallen. This doesn’t even count coupon payments.
I invested in a similar time $100,000 in fundraiserAs part of my dumbbell investment strategy. The vast majority of the gains come from selling my old house to make a profit.
These bonds pay 4.25% of coupons every six months. About $3,199 every six months, such as clockwork. I will continue to pay until May 15, 2035, when the bonds matured and I will pay the full $150,542.
Earn guaranteed money and doing nothing can feel like a dream come true, especially now that I’m tired of being a landlord. I thank my young self for working hard to save and invest more than 50% of the income.
But let’s run some scenarios:
- In two years, interest rates fell by 1% (from 4.25% to 3.25%).
My bond suddenly looked more attractive. New buyers can only get 3.25% from fresh 10 years, while my payout is 4.25%. The market adjusted by raising the price of my bond by about 6.5%. The gains of $150,542 are about $9,785. Adding to the two years of coupon payment ($6,398), I’ll add $16,183 to a 10.75% return, risk-free. - Interest rates rose by 1% (from 4.25% to 5.25%) More than two years.
The value of my bond will drop by about 5.2%. This sounds bad for risk-free investment, but it’s the skirting machine: if I just stick to it until I mature, I’ll still get all the coupons and the principal principal. At the same time, I hapiness Buy new Treasury bonds at 5.25% to lock in more passive income.
That is the beauty of the treasury. Either way, you or I won. Of course, there is inflation to deal with. However, each investment involves inflation to calculate the real rate of return.
How many Treasury bills can be appreciated based on the interest rate drop
Here is how a 10-year bond (4.5% coupon, $1,000 par value) increases the value of a drop in yields:
- 25 barrels down (4.50% → 4.25%): $1,020 (+2.0%)
- 50 barrels down (4.50% → 4.00%): $1,041 (+4.1%)
- 75 barrels down (4.50% → 3.75%): $1,062 (+6.2%)
- 100 barrels (4.50% → 3.50%): $1,083 (+8.3%)
- 125 barrels fell (4.50% → 3.25%): $1,105 (+10.5%)
- 150 barrels (4.50% → 3.00%): $1,127 (+12.7%)
- 175 barrels fell (4.50% → 2.75%): $1,150 (+15.0%)
- 200 barrels fell (4.50% → 2.50%): $1,174 (+17.4%)
- 225 barrels fell (4.50% → 2.25%): $1,198 (+19.8%)
- 250 barrels down (4.50% → 2.00%): $1,223 (+22.3%)
- 275 barrels fell (4.50% → 1.75%): $1,248 (+24.8%)
- 300 barrels (4.50% → 1.50%): $1,274 (+27.4%)
- 325 barrels fell (4.50% → 1.25%): $1,301 (+30.1%)
- 350 barrels down (4.50% → 1.00%): $1,329 (+32.9%)
- 375 barrels fell (4.50% → 0.75%): $1,357 (+35.7%)
- 400 barrels (4.50% → 0.50%): $1,386 (+38.6%)
In other words, if the 10-year Treasury yield drops to 0.6% – the all-time lowest level in March 2020, your 10-year Treasury bonds may increase the value of your 35% to 40%. More realistically, if the yield drops to around 3%–3.5%, you may see a price appreciation of about 8%–13% based on regular coupon payments. good!
Why is the higher gain a gift
The higher the speed, the more excited I am. This may sound strange, but here’s why: I believe the long-term trend of inflation and interest rates is falling.
Technology, productivity improvements, global coordination and lessons learned in the past cycle have all served as long-term deflation. These should ultimately lower interest rates. Additionally, as the Fed re-reduces its downgrade, I’m not sure today’s 4%-5% risk-free rate of return may not be around forever.
That’s why I buy now. Locking these yields feels like a gift to my future self, and he may no longer want to live another finger to write articles to help you all build more wealth and live a free life.
Besides the treasury, I will invest in real estate again because they are like bonds and investments. In other words, in an environment where interest rates are falling, real estate has greater room for growth, while also providing downward protection.
Stock + Treasury: Golden combination
Currently, investors have the best of both worlds:
- A bull market for stocks.
- High risk rate of return in the treasury.
This combination does not occur frequently. But when doing so, it is a dream for anyone who is in the fire.
When I retired in 2012 with a net worth of about $3 million, I was happy with it, so I logically adjusted my lifestyle. Remember that if you don’t do anything to change the suboptimal situation, you are not financially independent. At the time, the stock market felt strange, but bond yields were relatively attractive at 3%-4%. Fast forward to today: the stock market is several times higher and the yield is higher. Talk about lucky settings.
Let’s do thought experiments. Suppose you have worked hard to save 35 years of income and invested more than 50% of your income. Now you have a $10 million portfolio: $6 million for the S&P 500, $4 million for the bonds generates 4%.
- Stocks earn 7% → $420,000.
- Treasury bonds are 4% → $160,000.
That’s $580,000 of annual pre-tax income and an annual expenditure budget of $300,000. You don’t even have to touch the principal. Your net worth will only continue to be more complicated until you die with far more than you need.
Don’t underestimate the treasury
It’s easy to see the Treasury as a boring Treasury bond compared to AI startups or meme stocks. But this will be a mistake. They provide stable income, reduce portfolio volatility, and if interest rates drop, they can bring meaningful capital gains.
They are not flashy, but they don’t need to. When it comes to financial security, boredom is beautiful.
So, next time you want to ignore the treasury, remember: they can also appreciate the value. Sometimes the least excited investment is investment that quietly builds lasting wealth.
Reader, what do you think about investing in treasury bills with 4% or more? Do you think inflation and interest rates are lower, or rebound is higher? Did you know that the treasury can also appreciate value – not only paying stable income?
Make more wealth suggestions
If you think that in the next few years, interest rates will drop, like I did – it might make sense to invest in bonds and real estate. In addition to bond bonds, you might consider FundraisingIt is a private real estate platform that manages $3 billion in assets of more than 380,000 investors. Its residential and industrial commercial property portfolio is very conducive to benefiting in a declining rate environment.
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