Are Long-Term Bonds Still a Good Investment?
- Matt Erickson
- Aug 13
- 2 min read
For many years, long-term bonds (aka T-bonds from the United States Department of the Treasury) were seen as a safe and reliable part of any investment portfolio. They provided steady income, helped protect against market swings, and formed the backbone of the traditional 60/40 stock-to-bond strategy.
But Are Long-Term Bonds Still a Good Investment Today?
The short answer is no. Several key shifts in the market have made long-term bonds far less effective than they used to be. In the current economic environment, the long-term bond approach no longer holds up—and investors need to rethink their strategy.
What Changed?
Interest rates have risen significantly. As central banks raised rates to combat inflation, bond prices dropped—especially for long-term bonds, which are more sensitive to changes in interest rates. Investors holding 20- or 30-year bonds have seen large losses, sometimes in the double digits.
Inflation has become a major factor. A bond that pays 3% per year loses real value if inflation is running at 4% or more. Locking in low returns for decades is no longer a smart tradeoff when purchasing power is being eroded.
Short-term alternatives now offer better returns with less risk. Treasury bills, CDs, and other short-term instruments are yielding 4–5% or more. It simply doesn’t make sense to take on 30-year interest rate risk when safer, more flexible options are available.
Bonds no longer provide the same protection during stock market downturns. In 2022, both stocks and bonds fell at the same time, breaking the historical pattern of bonds acting as a buffer. This shift has made the traditional portfolio model much less reliable.
Rising government debt and fiscal uncertainty are putting additional pressure on the long-term bond market. With national debt levels at all-time highs, the outlook for fixed-income investments is more uncertain than ever.
A Better Way Forward
In effect, long-term bonds aren’t just underperforming. They’ve become structurally flawed in this new environment. Fortunately, there are much better options available today. Modern investment strategies can offer stronger returns, less risk, and more effective protection against market volatility.
What Does That Mean for You?
In short, a better investment strategy with more effective protection means you can reach your money goals faster. If you need an updated approach to investing, simply book an introductory meeting today. It's your first step to developing a portfolio that’s built for consistent resilience and growth in today’s changing world.
Sincerely,
