The rates of treasuries went up in the US. I would like to save for college for my children so I know that in 10 years when they need to pay for college I will have the funds. Could I buy 10 year treasuries? Would that be a good choice?

Basically I want to avoid stock market fluctuations and ensure I will have the funds at that time. What are the drawbacks of it? Or what else could I invest it to benefit from higher rates and get the funds back in 10 years? (In 2023 money I would like to have 1 million or so saved).

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    College tuition has inflated at a rate somewhat higher than the CPI. You might consider TIPS rather than conventional treasury bonds, but neither are likely to keep up with the inflation in college tuition. Jan 24, 2023 at 17:33

2 Answers 2


Could I buy 10 year treasuries?


Would that be a good choice?

Well it would be safe (meaning you would definitely get exactly the yield you bought into) but college costs have risen much more than current 10-year treasury yields and inflation, and are likely to keep doing so, barring major regulations or overhauls of college costs. So you would need to base how much you contribute not on current college costs, but what you expect costs to be in 10 years, which would mean you'd need to save more than current college costs. Plus, unless you plan to save all of the money at once (which would be unusual) you'll have to buy more bonds over time, reducing the tenor as you go.

With a 10-year investment horizon, you can afford to take more risk that will on average give you more return than risk-free treasuries. It doesn't necessarily mean you have to buy risky stocks - there are other "safe" investments like corporate bonds that give higher yields than treasuries with less risk than stocks.

You might also check on 529 plans in your state. Many states offer state income tax deductions on contributions, and earnings are tax-free (there is no federal tax deduction for education savings at this point). The 529 provider can also give you a decent number of investment options ranging from risky equity finds to safer bond funds, and might even have plans that reduce the risk the closer you get to college. That would be a decent choice if you're not comfortable picking your own investments and managing risk over time.

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    One thing to add: you can use any state's 529 plan (maybe you like the investment options better or the fees are lower), but if your state has an income tax deduction for contributions, you need to use your state's 529 plan to capture the deduction (with a few exceptions).
    – Stan H
    Jan 24, 2023 at 17:39
  • Maybe also mention that one of the reason rates on treasuries are going up is that they are not risk-free. The risk is probably still negligibly small but important to understand that higher return usually comes with higher risk.
    – blues
    Jan 25, 2023 at 10:43
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    @blues: While there is a brinkmanship game going on in Congress, the rise in Treasury rates has never been based on risk of default (they've had a AAA rating for decades, and have never defaulted). They define risk-free assets, and have ever since Bretton Woods. Treasuries rise and fall primarily due to demand (flight to quality in poor economic conditions) and by comparison to alternatives (Treasury bills match the fed funds rate because they're both short-term near-zero-risk options, and no one would take a lower rate). The fed funds rate is up, so shorter-term treasuries are going up. Jan 25, 2023 at 12:34
  • Not claiming there isn't a risk of morons in Congress ruining this reputation of Treasuries, but no one is seriously pricing in the risk of default yet. The rates on the longer term treasuries have risen slowly, but what increase has occurred occurred before the recent round of debt limit nonsense; it was almost entirely tied to the inflation environment and the expectation of fed rate increases (you wouldn't want to lock in a long term low interest rate when you expect short term rates to rise and provide greater profit). Jan 25, 2023 at 12:37
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    Regardless, the reason treasuries have gone up is not because of a greater risk of default; it's because the Fed is paying more interest on bank deposits (and charging more for loans).
    – D Stanley
    Jan 25, 2023 at 18:54

This may not be an answer, but it's more than a comment:

Have you looked at the related questions?

Ten-year treasuries are currently returning 3.514%. Compounded over 10 years, if I'm doing the math right, your initial investment for $1M result would need to be about $706,000 if you bought 10-year bonds today.

To get better return -- to hit $1M with less initial investment -- you'd have to accept greater risk.

Longterm, the stock market as a whole has historically averaged about 8%. Again assuming my calculation is correct, that means an appropriately diversified mixture to follow that return would lower your investment to $463,000 if you put it all in now, more if you can't invest it all up front and need to accumulate the money over time. But as you note, there is risk associated with this; if there's a dip such as the past year's you might have to wait for it to recover, or take student loans and repay them after recovery though that has its own flavors of cost and risk.

I don't have much to offer beyond those observations, I'm afraid...

Edit: Actually, I do have one addition: I paid for a BS at one of the more expensive schools mostly with scholarships and student loans and on-campus jobs, and I've known a few folks who worked for more serious income before and during college to cover it. Admittedly costs have gone up a lot since the year I instigated the Annual Spontaneous Tuition Riot ("$7400! Too Damn Much!"), and everyone would prefer to be able to pay their kids' tuition to get their careers launched... but if you come up short of being able to cover it completely, that isn't necessarily a disaster. "Where will wants not, a way opens."

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