I bonds

[Lowdown3]

Saw an interesting article on Seeking Alpha this morning-

https://seekingalpha.com/article/4473867-safest-7-percent-yield-government-guaranteed-park-your-cash?mailingid=25979571&messageid=dividend_ideas&serial=25979571.58869&utm_campaign=Dividend%2BIdeas%2BLaunch%2B2021-12-09&utm_content=dividend_ideas_control&utm_medium=email&utm_source=seeking_alpha&utm_term=Dividend%2B%26%2BIncome%2BSmart%2BList

Looks like copyandpasta from here-

https://www.treasurydirect.gov/indiv/research/indepth/ibonds/res_ibonds.htm

7% is a decent return right now. Kinda ironic it's an "inflation" related bond issued by the gubmint. Maybe if this "transitory" inflation stays this could be a good bet.

Beats the hell out of 0.002% at bank anyways.

Anyone use these?

[wwdnet]

Saw an interesting article on Seeking Alpha this morning-

https://seekingalpha.com/article/4473867-safest-7-percent-yield-government-guaranteed-park-your-cash?mailingid=25979571&messageid=dividend_ideas&serial=25979571.58869&utm_campaign=Dividend%2BIdeas%2BLaunch%2B2021-12-09&utm_content=dividend_ideas_control&utm_medium=email&utm_source=seeking_alpha&utm_term=Dividend%2B%26%2BIncome%2BSmart%2BList

Looks like copyandpasta from here-

https://www.treasurydirect.gov/indiv/research/indepth/ibonds/res_ibonds.htm

7% is a decent return right now. Kinda ironic it's an "inflation" related bond issued by the gubmint. Maybe if this "transitory" inflation stays this could be a good bet.

Beats the hell out of 0.002% at bank anyways.

Anyone use these?

No, but hubby bought 26 shares of Rumble and is making $$

[1Admin]

Missed my window for 2021 with these due to being slap busy, but I'm going to get started on these in 2022.

[rockriver]

2 associates have recommended them... they look great.
and..
they indicate something that ain't good.
the gov't needs to pay a high interest rate to offset the crazy spending...
i'm trying to remember some references... maybe rawles in patriots. maybe some other books, but my brain is slow right now...
spooky times we are in.

[Patriotic Sheepdog]

I have not dabbled in I-bonds...what happens if gubermint goes belly up or changes currency or adds zeros to the current currency?

[rockriver]

patirotic,
great question... this is why bonds that have poor ratings pay higher %

makes a good case for a tractor, or a truck or a large tank of fuel.

[Lowdown3]

The rate was as high as 9% for a while in 2022 and then re-set to 6.72% IIRC at the end of October. There is a $10,000. per year limit and you can "gift" a similar amount to your spouse I believe as well.

Still better than the 3% it took months to negotiate from our local bank for money market funds.

If I had a guess, the fed will hike rates just a littttttlllle bit more this year and then back off. Americans are addicted to debt and it has been fueling our economy for decades now. Higher rates will squash some of that indebted spending as people have to actually have more than a pulse to get a new home loan, etc.

When we see CDs around 5 1/2% if I had an uneducated guess, I would say this would be the top you could expect for the short term. 5 1/2% return on a CD probably equates out to a lending rate approaching what... 8 or 9%? I've already heard people talk of new home loans with rates at almost that.

My short term plan is to try to ladder in some funds if/when CD rates hit at least that. Till then, I will try to keep the money earmarked for that in money market funds which are running pretty close to most CD rates.

If they start cutting rates again, the money market rates will drop, but it might be nice to be locked into the CD rates.

Such a crazy time, it's hard to make solid choices. Staying in cash at 3% isn't bad considering just last year it was under 1% for money markets. But if rates are going to increase a little more and then probably decrease - based on Fed thinking the economy will further collapse and/or to fuel a new round of debt spending orgy, start housing bubble 3.0- locking some up for even a year or so with higher rates might be a good choice.

If you have an Etrade account, Morgan Stanley who owns Etrade now, offers 3.5% on money market and it's easy to set up an account linked to your non retirement Etrade account and transfer money back and forth. So if you are holding a lot of cash in your investment account but aren't seeing anything from it, you can move some of it to that with one click and move it back with one click if you want to invest.

[Lowdown3]

Zerohedge article talking about the same, re: one more hike and then probably nothing more for a while.

https://www.zerohedge.com/markets/one-and-done-fed-mouthpiece-nick-t-says-next-fed-hike-will-be-25bps

[Patriotic Sheepdog]

I am not buying the rate hike stop yet...but I am not a financial advisor, so who knows....They will have to continue to raise rates to stave off inflation. The gov reported inflation is about 6%...however, the real rate of inflation is much higher as we all know (look at your bills). The current reported rate does not include food, housing and fuel...figure that in and the real rate is close to 15%-16%. I believe they will try and slow down and maybe try 25 basis points for one or two times, but then will need to bump it back up as that plan won't go well. Inflation is not going away, despite the MSM reports...gold this morning was over 1900...I believe we will see gold go into the 2000's this year (and some-not me- are predicting into the $3000's). I think we will see double digit home loans this year and continue into next year. We are repeating the late 70's early 80's where home loans were 13%-18%.

A $300,000 loan with $30,000 down at 2.5% (remember those days a couple years ago?) the payment is $1426 with PMI
A $300,000 loan with $30,000 down at 5% the payment is $1845 with PMI
at 10% the payment is $2765 with PMI
and at 13% (what I paid for my first home and I thought I had won the lottery as loan rates had been 18%) it is $3382 with PMI

How will people afford these rates? Their incomes are not increasing to stay up with the rate hike now, and if they are lucky to get a small bump in pay, well lots of other things have gone up like fuel to get to work, and food to eat.
Housing market will crash, and it has started to show cracks. How many people are saying now days, wow I listed my home and it sold in 2 days and there was a bidding war...I got $20,000 more then it was listed for....

Oh, and the car market isn't looking to healthy....just sayin'

I am not a financial advisor, and do not play one on TV or the internet...LOL

Here is a chart I just found on the interwebs...There are not a lot of people that remember this history or look for it:

[surviort_wwdnet]

Results like shown in the chart are why my parents paid cash for all their real estate and never took out a mortgage on anything. I paid 6.5% interest on my house in 2004, doubled the payments, and the principle only inched downward at a snail's pace. We have no mortgage or car payments, for which I'm grateful. I did spend $145 on firewood, which saved me about $50 on my heating costs, but the coziness is worth it.🔥

[Patriotic Sheepdog]

I have seen articles over the last several months suggesting a 50 year mortgage....:eek: This may be the only way the sheeple will be able to "afford" a home. Problem is, as most here know, the interest payment will be ginormous. The banks will feed off the people that are unaware/stupid enough to fall for this. They will jump in thinking, "well my parents did a 30 year loan, I guess I can do a 50 years as I am only 28 years old. I can always sell the home in 5-10 years or refinance".

So, looking at the same $300,000 loan, with $30,000 down payment the monthly payment is $2336...total interest paid when they pay off that loan in 2072 will be $894,395 :(

Now I want to say, we used our home as a bank, and refinanced 4 times over thirty years...We bought "investments"...a piece of mountain property in TN, we bought a cabin and property in TN, we bought a rental property in IN, and we opened a business. With each refi, we were able to take money and lower our mortgage interest payments. We made significant money on three of the four investments over time, and the rental property in IN..well we pretty much just barely broke even, but we were able to pay off our mortgage before I retired. I am not bragging, I am just trying to say that there are ways to "use" a house/mortgage to your advantage if done properly. I think we were lucky in some ways as it turned out fine for us, but if you are not aware of how finances work you can get pulled under.

[1Admin]

PSD- You took a risk, but did something smart with the money. Most don't.

Most idjits grabbed their own collars (think Monopoly Man look) and smarted them thinking "I'm soooo smart, I bought this chipboard McMansion for $300K a few years ago and now it's "worth" $350K, I think I will re-fi and take $50K of my "profit" out and have some fun with it.

Then they bought a boat, or went on that "bucket list" trip (someone under 60 shouldn't have a "bucket list", sorry grow TF up), or bought matching $10K ATVs for their kids and maybe some "toys" for Mommy and Daddy too. Now their great investment is back under $300K in value yet they owe over $300K. Hopefully they paid attention and didn't get an ARM. I remember when rates were at "all time lows" and dunskies were getting ARMs.

As far as rates continuing to go up. It makes sense and that is what SHOULD happen. But then again the can keeps getting kicked down the road, farther and farther and they seem to do what they can to keep the economy limping along. And since the economy is largely based on debt, I think there is a point where the idea will be "oh hell, what's another 10 trillion!" and rates will actually drop back- making the "consumer" feel like "hell yeah, free money again, wooo hooo!" which will fuel the economy (briefly at least).

I guess we will see soon enough.


The I bonds can be bought every calendar year right? In other words, it's now 2023, we bought some in late 2022 but we can buy more now correct?

[Patriotic Sheepdog]

Agree...most want toys and think the house is the bank. They do not try and take any money and buy investments. But this is the way they were taught...