[quote=svelte]Why does anyone think this is a good deal?
The fixed rate is zero and remains that way for the life of the bond.
Therefore, the rate of the bond is twice the semi-annual inflation rate, ie it is the rate of inflation. And that is calculated twice a year.
In other words, your money is just staying pace with the rate of inflation!
You’re not making money – you’re just breaking even![/quote]
Most bonds, if you buy a bond fund and interest rates rise, well the bond loses value. So if you want bonds without principal risk, this is an option.
The ones I bought 20 years ago are up about 300% and have paced the S&P 500 but that was with an additional 3.5% guaranteed return. I hope inflation peters out in a few years. But who knows, one by product of excessive government spending is inflation.
