Think Equity Investing Can’t Be Risk Free? Think Again
Want to earn much of the upside of the stock market without any risk?
Sounds impossible, but it isn’t, and we’re not talking about an equity-indexed annuity (rebranded as a fixed indexed annuity). It’s actually quite simple and can be done with ultra-low fees and high tax-efficiency. Here are two ways, and both involve buying a single Treasury Bond and investing in a stock index fund. Let’s take a $100,000 portfolio as an example, and a long investment horizon of 20 years.
Away we go.
Nominal Risk-Free Return
We start with a zero-coupon Treasury bond, which is hopefully risk-free. It pays no coupon income, and the entire return comes at maturity. The current yield of a 20-year, zero-coupon bond as of Dec. 31,…
