Introducing Forbidden Bonds

Bonds are for suckers...

Written by Jimmy Mengel
Posted April 20, 2015

When I was a kid, my grandmother used to give me a 10-Year Treasury note each year for my birthday. It was both a generous and responsible gift to give a young rapscallion whose idea of saving was dumping loose change into a ceramic pig — only to spend it at the arcade that very weekend.

Now, as a hell-raising kid, I would have much preferred a slingshot, baseball cards, or some sort of loud, battery-powered toy to abuse my parents with...

I didn't really appreciate the interest from these Treasury notes until they (and I) matured 10 years later. I cashed them in to help buy my first car which — thanks to Grandma — I was able to do in cash. I'd opine that most teenagers aren't able to do that these days.

At today's interest rates, I would have been lucky to afford a beat up scooter with that return: yields are currently sitting at a pathetic 1.87%. But when I got my slice of U.S. debt in the early 1980s, they were yielding upwards of 10 to 14% — a significant return anyway you slice it.

Today, however, notes and bonds are even more boring to me than they were when I was a kid. And that is saying a lot.

Needless to say, I'm not buying my kids a stack of Treasuries for their birthdays. I have a much, much better option...

Now, I don't fault any investor for cashing out at what looks to be the height of this six-year bull market. I know I've personally been taking profits and shifting some of my portfolio into safer, long-term investments like income-producing dividend aristocrats.

But the simple fact is buying U.S. debt today really doesn't get you much bang for your buck. Frankly, once inflation returns to historical averages, you'd barely be breaking even. Since the crash in 2009, we haven't seen yields this low since a certain Austrian painter began goose stepping around his European neighbors...

treasury yield

These yields are down 2.17% compared to the end of last year, and less than half of the average over the last 20 years.

Yet despite the pitiful yields, nervous investors are piling into U.S. Treasury bonds in droves. JPMorgan Chase has predicted that individual investors like you and me will dump $350 billion into debt funds this year alone. That is on top of the $3 trillion that have flooded into bonds after the crash...

Again, I don't blame folks for doing this. After watching a record amount of investment dollars disappear after the 2009 crash, investors are right to be jittery about riding this wave to the ultimate crash.

"It may be that they're sticking with bonds because they're the lesser of two evils," Charles Schwab strategist Kathy Jones told Bloomberg.

But I'm here to tell you that is a false choice — there are more options than reaching for the stars with stocks or writhing in the dirt with bonds. There is one way to invest in debt that is not only as safe as bonds, but yields a whopping 9.5%. I call them Forbidden Bonds...

You see, these brand new Forbidden Bonds boast a track record safer than even the highest-rated corporate debt. In fact, barely 1% of these bonds default in a given year, while nearly 5% of all corporate bonds do.

Even better, you can buy these special bonds tax-free, without paying a thing to the federal government.

And they have nothing to do with stocks or any other type of bond you’ve ever seen.

As I told you, U.S. 10-year Treasuries are paying out under 2%. And even high-quality corporate bonds are paying anywhere from 2% to 4%.

But what they don't tell you is that your profit is going to look much smaller than that because the broker and the bank are going to take their cuts off the top.

Then there’s the U.S. government... When tax time comes, it's going to collect its share of the profits, too.

So that meager 4% yield doesn’t look so good after everyone else has pocketed his or her share.

That’s why these Forbidden Bonds were created...

They connect you directly with your profits. There’s no need for a big bank, no need for a broker — and you can collect those profits tax-free if you buy them the way I recommend.

Here’s how simple it is...


Jimmy Mengel

follow basic @mengeled on Twitter

Jimmy is a managing editor for Outsider Club and the investment director of the personal finance advisory, The Crow's Nest, and cannabis stocks advisory, The Marijuana Manifesto. You may also know him as the architect behind the wildly popular finance and investing website Wealth Wire, where he's brought readers the stories behind the mainstream financial news each and every day. For more on Jimmy, check out his editor's page.

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