The Dangers Lurking in Bonds

Bonds don’t often lose money quickly, but they can cause you death by a thousand cuts. Here’s how to avoid that fate.

Bonds have been on a tear for 30 years. From the start of 1982 through May of this year, Treasury notes with maturities of about five years returned an annualized 8.4%. Riskier 20-year Treasury bonds did even better, returning an annualized 11.1%, according to Morningstar.

The latter figure is higher than the U.S. stock market’s long-term return. Since 1926, large-company stocks have gained 9.8% annualized. And the stock market’s returns have come with a tremendous amount of volatility. Bonds are much less volatile.

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Steven Goldberg
Contributing Columnist,
Steve has been writing for Kiplinger's for more than 25 years. As an associate editor and then senior associate editor, he covered mutual funds for Kiplinger's Personal Finance magazine from 1994-2006. He also authored a book, But Which Mutual Funds? In 2006 he joined with Jerry Tweddell, one of his best sources on investing, to form Tweddell Goldberg Investment Management to manage money for individual investors. Steve continues to write a regular column for and enjoys hearing investing questions from readers. You can contact Steve at 301.650.6567 or