'I have a third of my portfolio in US Sovereign Debt, Here's Why'

Investing

Published: February 5, 2025 3:22 pm

24/7 Wall St. Key Points:

U.S. Treasury ETFs like BIL provide investors a safe and liquid means to earn yields above close to 5.0%
Treasuries remain a strong investment because the USD remains the reserve currency of the world
As good as BIL could be for income, these 2 dividend legend stocks could be even better. Click here to learn more and see why they may soar in 2025.

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Transcript:

[00:00:04] Doug McIntyre: Lee, I’ve got about a third of my portfolio and what I call us sovereign debt. Okay. I actually have it through an ETF, but the fact of the matter is, is for safety. And quite frankly, I mean, Depending on how I buy this stuff, I can be looking at north of a four and a half percent yield. That’s right. On what is still, I hope, the safest investment in the world.

[00:00:31] Doug McIntyre: I mean, I’m about a third in. What, what do you think about that? How would you use them in your portfolio?

[00:00:36] Lee Jackson: Well, have them in mind as well. And I think it makes sense because even though our debt is ridiculous, and our debt to GDP is the highest it’s been since World War II. But we finally reached a point, which is almost a tipping point, where I think Washington finally gets the joke that, Hey, we have to start getting back at the minimum to a balanced budget, which we had in the mid 90s.

[00:01:02] Lee Jackson: I mean, Clinton and Newt Gingrich, they worked together and we had a balanced budget. It didn’t mean that we didn’t have government debt, we had debt, but we were buying and paying for our bills and we were flat at the end of each year. And so I think that, I mean, always, when you’re backed by the full faith and credit of the U.S.

[00:01:19] Lee Jackson: S. government, you’re going to get paid. You are going to get paid because we have to remain the world’s reserve currency. And so, while some of the, foreign countries that used to buy them hand over fist have tapped the brakes and in many cases sold as yields dropped, I think they’re a, a really good idea because, you can, you can either buy them individually, which you can buy through your broker or you can buy often by yourself through your, if you.

[00:01:46] Lee Jackson: Have your own account in a bank or a brokerage group or you can buy them in an ETF, which I think you and I both own. That’s what I do. Yeah. Yeah, and the BIL is that’s what I own.

[00:01:58] Doug McIntyre: I own the BIL.

[00:01:59] Lee Jackson: It trades on an exchange and you can buy or sell it every day at any time and it just tracks the one to three month and maybe up to six months treasuries.

[00:02:11] Lee Jackson: And so it’s super safe, it’s super liquid, it pays I think about a 434 40 dividend was the short end of the market pays a lot and I think it makes a lot of sense because then you can add that to your portfolio especially if you’re a retiree or somebody in your 50s or 60s and you want to have some growth via dividend stocks like we like like Altria (NYSE: MO) and AT&T (NYSE: T), Verizon (NYSE: VZ), Safeworks, you can kind of barbell that with the safety of the treasures.

[00:02:41] Doug McIntyre: Yeah, now you like these way better than CDs, right?

[00:02:45] Lee Jackson: Yeah, I do simply because I mean cds are great and up to 250 000 Cds and high yield money markets are are protected by fdic insurance But especially if you buy a longer dated CD one that’s three to five years, there’s sometimes pretty severe penalties if you need to get at that money.

[00:03:05] Lee Jackson: And that’s why high yield money markets that, like PNC Bank has one, American Express has one that yield anywhere from 380 to 420. Or you can buy the BIL, which trades on an exchange yielding, and there’s no penalty to sell.