PBS NewsHour Blog Features Zvi Bodie on Investment World’s Best-Kept Secret

in Faculty, Faculty in the News, Finance, News, Risk Management
May 16th, 2013

Bodie, PBS notes, is “perhaps country’s foremost expert on pension finance”

The NewsHour blog “The Rundown” features insight on little-known safer investing strategies by the School of Management’s Zvi Bodie, “perhaps the country’s foremost expert on pension finance.” Bodie is Boston University’s Norman and Adele Barron Professor of Management in finance and author, most recently, of the books Risk Less and Prosper and Essentials of Investing, 9th Edition.

In his latest NewsHour post, titled “The One Safe Investment and Why You Never Hear About It,” Bodie writes,

…I recommend that for people concerned about preserving the purchasing power of their savings, an investment program should start with the purchase of US Treasury Series I Savings Bonds, of which you can purchase up to $10,000 per year per person….I Bonds provide the ultimate in long-run liquid financial security to residents of the U.S. An investor in these bonds cannot lose any money or any purchasing power for up to 30 years, despite either inflation or deflation. They provide a return at least equal to the rate of inflation and, often, have paid a “premium” of interest above and beyond inflation.

At the moment, because of historically low interest rates, that premium is zero, but it is reset every six months. If, in September (or the following March or a year from September, etc.), new I Bonds do offer a premium, you can sell the current ones and use the money to buy the new ones.

Read the full post, see all the comments it has inspired, and watch a related video on “The Rundown” blog.