Q: My wife and I are both happily and comfortably retired. During our younger years, we were both heavily invested in stock and mutual funds. But, after accumulating a nice little nest-egg, over the past ten years we have been very conservative and have very little in stock and mutual funds. The majority of our investments are in laddered fixed-income, such as some corporate bonds, government agency bonds and most in broker CD’s. At one point, some funds were transferred to my credit union in one year CD’s paying 3.25%. As a result, we have maintained our principal and have not been impacted too much by the recession so far.

As stated, a large portion of our investments are in CD’s that are paying 5% or better and a few government agency bonds also paying 5% or better, both maturing as far out as 15 years.

I would like to know your thoughts on purchasing new government agency bonds at this time? (Fed Hm Ln Mtg Notes, Fed Hm Ln Bk Notes, Fed Farm Cr Bk Notes, Fed Natl Mtg Notes, etc) Are they reasonably safe in light of the economy?

A: I think government bonds are safe. I don’t think the US government is going out of business any time soon. You just won’t get a great interest rate. So, safe, but you won’t get rich off of it. Still, not losing principal – as so many of us have – feels pretty good too.