Are you supporting our government’s spending habit? Are Treasury bonds in your 401k? Are you a form of QE?

Say your 401k is with a large investment management group such as the Vanguard Group or Fidelity Investments. If you put money into one of their money market, bond, balanced, or retirement dated funds, you have probably just bought some part of a Treasury bond. Please take a look at both your current holdings and future contributions; drill down for each investment in the research section at your group’s website to find the percentage of Treasury bonds you are buying and holding. More and more the question has to be raised: is buying these debts patriotic or just enabling the federal spending habit?

Treasury bond prices have fared well of late, mainly because the world views them as safe investments.  However, many economists believe interest rates will eventually have to rise (they cannot go lower). As the prices of bonds fall when rates rise, it may also be a good idea from a return perspective to begin to divest of Treasury bonds even if you disagree with the argument above.