For more information and a complete list of our advertising partners, please check out our full Advertising Disclosure . TheCollegeInvestor.com strives to keep its information accurate and up to date. The information in our reviews could be different from what you find when visiting a financial institution, service provider or a specific product's website. All products and services are presented without warranty.

But we do have to make money to pay our team and keep this website running! Our partners compensate us. TheCollegeInvestor.com has an advertising relationship with some or all of the offers included on this page, which may impact how, where, and in what order products and services may appear. The College Investor does not include all companies or offers available in the marketplace. And our partners can never pay us to guarantee favorable reviews (or even pay for a review of their product to begin with).

There are thousands of financial products and services out there, and we believe in helping you understand which is best for you, how it works, and will it actually help you achieve your financial goals. We're proud of our content and guidance, and the information we provide is objective, independent, and free.

At The College Investor, we want to help you navigate your finances. To do this, many or all of the products featured here may be from our partners. This doesn’t influence our evaluations or reviews. Our opinions are our own.

Bond prices have been rising steadily since the 2007 financial crisis. Many individuals, investors, companies, and institutions have been flocking to Treasury Bonds for their relative safety compared to other financial products. However, with the economy recovering more every day, and other securities, like stocks, starting to look more attractive, is the bond bubble finally going to pop?

Where We’re At

With the Federal Reserve setting the Fed Funds rate between 0% and 0.25%, and letting the world know they probably will do so until 2014, bond yields on just about every product have dropped to record lows. Essentially, bond buyers have accepted a risk premium that earns them zero return on their money in exchange for the guarantee that principal won’t be lost.

Just check out this chart of the 10 Year Treasury Rate since 1871:

As you can see, we are at historical lows. In fact, since 1871, the average yield on 10 year Treasury Bonds has hovered at 4.63% and a median value of 3.92%.

Conversely, you can see see how bond prices have performed. The best representation of this bond market I could find was the iShares Barclays 7-10 Year Treasury ETF. There are some shorter term notes in the mix, but it give a good representation of the pricing you will find for this type of bond:

Once again, you can see that the prices are at historical highs. Just six years ago, prices for the 10 Year Treasury ETF hovered around $82, and now they are past $105 consistently.

Where We’re Headed

The bottom line is that we have nowhere to go but down. It’s not going to be tomorrow, but in reality, the yields on these bonds can’t go down much further (and their corresponding prices can’t go up much higher). Continued bad news from Europe could shock the system a bit in the near future, but over the longer term (1-3 years), bond prices will fall and yields will start increasing.

Why Does This Matter?

If you’re looking to get a loan, now’s the time. However, if you’re looking for safety of your money, bonds are the right place for you right now. Yields will rise, and you will lose money as bond prices start to fall (unless you hold until maturity, but that is a different discussion of buying bonds versus bond funds).

So what should you do?

If you want safety, keep your money in cash, or get a short-term CD If you really want bonds, build a diversified bond portfolio and include a wide variety of corporate and other bonds Start looking at stocks Get a loan and take advantage of the low interest rates responsibly

Do you think the bond bubble is going to pop? If so, when? If not, why?