Government bonds give you a way to preserve the purchasing
power of your money. The after-tax return would probably
match inflation, but not beat it. It's a great way to build
up a cash reserve that is accessible at any time in case you
need it. You also get to defer taxes until you actually sell.
Keep in mind that ibonds and series EE bonds stop earning
interest after 30 years. There are also no fees when you
buy or sell these.

If you want to beat inflation, you'd have to try something
riskier. Whether or not it's a good idea depends on your
situation and what you might want to do with the money.
If you don't care about the liquidity until retirement,
it might make sense to put it in something riskier that
won't affect your tax liability too much on a year-to-year basis;
e.g. something like an index fund. However many funds
have low-balance fees, and/or minimum investment requirements
which might make it hard to find something suitable.
I would have recommended buying SPY through sharebuilder.com,
but I think the per-transaction fees wouldn't be worth it
in your situation.

Anoop

Mike Loll <michaelloll[at]nospam.hotmail.com> wrote in message news:<Xns94CAD8133F284MikeLollXNewsID2004[at]199.45.49.11> ...
- quote -

Hi folks,

I'm thinking of putting away a small amount of money each month in
treasury securities via Treasury Direct (www.treasurydirect.com).

I'm just wondering, is it even worth my time and money to be investing
in bonds? I'm 24, and I will begin to put away about 14% of my income
into my Roth IRA and a taxable investment fund starting in May, both at
Legg Mason.

I'm just curious what people think. Is it worth it? Am I better off
taking the money and sticking it into more risky securities?

I was planning a small amount - something like $25/month. Just to try
and spread my money out.

Thanks.

--
Michael Loll / michael.loll[at]NO.MORE.SPAM.hotmail.com