[retiredguy123]

Originally Posted by chrissy2231

I'm 76 & decided to preserve money. I sold everything and went into laddered CD's.

CDs were a good investment 30 to 40 years ago. But, since then, the Government's policy to punish savers and reward borrowers and spenders has turned them into a bad investment. Very sad.

[Boomer]

Originally Posted by retiredguy123

CDs were a good investment 30 to 40 years ago. But, since then, the Government's policy to punish savers and reward borrowers and spenders has turned them into a bad investment. Very sad.

Exactly…….but I am now spending some sideline cash on brokered CDs. I had never bought those before. I did not know that they are bought at $1000, so the number of CDs I needed to buy were in the number of 1000s I wanted to put in.

I have not laddered at this point. I just put some money in for 9 months at 4.70 (or was it 4.75?) annualized rate, FDIC insured, call protected.

Now…..watch for it……there will be at least one poster who will pop in to tell me I am not keeping up with inflation. (sigh) I know that, of course. But I also know it’s better than nothing like bricks-and-mortar banks think they can still get by with.

I do not sell long held dependable dividend stocks because we have been through this together before and I understand the companies enough to think they’ll be OK. Besides, if a dividend stock has been held for a very long time and the company is still doing well and has been increasing its dividend annually, without interruption, for a very long time, the math works nicely to see the dividend yield based on the original share price paid decades ago.

Boomer Whipple

[manaboutown]

I have been picking up some more 6 mo. T bills. The Fed is expected to continue raising rates so I am feeling defensive.

[melpetezrinski]

Originally Posted by Boomer

Exactly…….but I am now spending some sideline cash on brokered CDs. I had never bought those before. I did not know that they are bought at $1000, so the number of CDs I needed to buy were in the number of 1000s I wanted to put in.

I have not laddered at this point. I just put some money in for 9 months at 4.70 (or was it 4.75?) annualized rate, FDIC insured, call protected.

Now…..watch for it……there will be at least one poster who will pop in to tell me I am not keeping up with inflation. (sigh) I know that, of course. But I also know it’s better than nothing like bricks-and-mortar banks think they can still get by with.

I do not sell long held dependable dividend stocks because we have been through this together before and I understand the companies enough to think they’ll be OK. Besides, if a dividend stock has been held for a very long time and the company is still doing well and has been increasing its dividend annually, without interruption, for a very long time, the math works nicely to see the dividend yield based on the original share price paid decades ago.

Boomer Whipple

Many people don't fully understand the "keeping up with inflation" theory. It's not as simple as inflation is 10%, so I need to find an investment that matches or exceeds that rate of return. That is a flawed belief that helps financial advisors push equities. It's better to ask yourself, what has been the increase to all my expenses for a specific given time. Let's say you lived on $50,000/year and now it costs $60,000. That's YOUR specific inflation rate, which is 20%. Now, you must find an investment that covers that $10,000 increase NOT 20% to "keep up with inflation". If you had $300,000 in CD's earning 1% (yes that low and even lower!) a year ago, you were earning $3,000. CD's were earning 4% weeks ago, which would have provided you with that extra $10,000 of income and you would have "kept up with inflation". Now, this is NOT the entire picture or that I'm recommending CD's but please keep this concept in the back of your mind. Don't go chasing yield to beat inflation if it doesn't align with your risk/reward profile.

[retiredguy123]

Originally Posted by melpetezrinski

Many people don't fully understand the "keeping up with inflation" theory. It's not as simple as inflation is 10%, so I need to find an investment that matches or exceeds that rate of return. That is a flawed belief that helps financial advisors push equities. It's better to ask yourself, what has been the increase to all my expenses for a specific given time. Let's say you lived on $50,000/year and now it costs $60,000. That's YOUR specific inflation rate, which is 20%. Now, you must find an investment that covers that $10,000 increase NOT 20% to "keep up with inflation". If you had $300,000 in CD's earning 1% (yes that low and even lower!) a year ago, you were earning $3,000. CD's were earning 4% weeks ago, which would have provided you with that extra $10,000 of income and you would have "kept up with inflation". Now, this is NOT the entire picture or that I'm recommending CD's but please keep this concept in the back of your mind. Don't go chasing yield to beat inflation if it doesn't align with your risk/reward profile.

It sounds like your analysis only addresses your current spending level. But, if you have a substantial portfolio, you need to get a return that matches the inflation rate to maintain the buying power of your portfolio. For example, if you plan to buy a $500K house in 3 years, and you have a $500K portfolio today, your portfolio needs to grow to match the inflated price that the house will cost in 3 years. Otherwise, you won't have enough money to buy the house.

[Stu from NYC]

Originally Posted by melpetezrinski

Many people don't fully understand the "keeping up with inflation" theory. It's not as simple as inflation is 10%, so I need to find an investment that matches or exceeds that rate of return. That is a flawed belief that helps financial advisors push equities. It's better to ask yourself, what has been the increase to all my expenses for a specific given time. Let's say you lived on $50,000/year and now it costs $60,000. That's YOUR specific inflation rate, which is 20%. Now, you must find an investment that covers that $10,000 increase NOT 20% to "keep up with inflation". If you had $300,000 in CD's earning 1% (yes that low and even lower!) a year ago, you were earning $3,000. CD's were earning 4% weeks ago, which would have provided you with that extra $10,000 of income and you would have "kept up with inflation". Now, this is NOT the entire picture or that I'm recommending CD's but please keep this concept in the back of your mind. Don't go chasing yield to beat inflation if it doesn't align with your risk/reward profile.

Need to consider your tax rate in regard to what you are earning and agree 100%

[melpetezrinski]

Originally Posted by retiredguy123

It sounds like your analysis only addresses your current spending level. But, if you have a substantial portfolio, you need to get a return that matches the inflation rate to maintain the buying power of your portfolio. For example, if you plan to buy a $500K house in 3 years, and you have a $500K portfolio today, your portfolio needs to grow to match the inflated price that the house will cost in 3 years. Otherwise, you won't have enough money to buy the house.

Yes, my somewhat short sighted "analysis" was basically just stating what you replied in that your "substantial portfolio" needs to "get a return that matches the inflation rate to maintain the buying power". Isn't that what keeping up with inflation is all about? Many smart, wealthy people welcome a little healthy inflation, as they can still maintain their buying power with less risky assets.

[Babubhat]

More people need to understand you can make good money betting against the market. Piece of cake the last year

[tvbound]

For those who still have investment money, after betting/losing against Tesla for so many years by shorting them, 2022 finally paid off. A lot of analysts say that Musk has been too enamored with his new toy Twitter and isn't paying enough attention to Tesla and his other companies, so we'll see if he really steps away from what seems like an obsession with him.


Tesla's largest-ever decline has short sellers sitting on $15 billion in profits: Morning Brief

[Bay Kid]

TIPS is still doing good thanks to all the inflation.

[CoachKandSportsguy]

Originally Posted by Stu from NYC

Need to consider your tax rate in regard to what you are earning and agree 100%

Thats cost / expense minimization strategy versus the wealth income maximization strategy described here

The more money you make to keep up, the more taxes you pay, so keeping up with higher inflation with higher returns will increase your taxes. .

taxes are a byproduct of doing well, and you want to do well? the only tax strategy for increased income/wealth is income gains versus capital gains. . . that balance is the key. .

I have never sat in a growth investment corporate meeting and the tax strategy was the guiding strategy. . . just a foot note. . .

[CoachKandSportsguy]

Originally Posted by Boomer

Exactly…….but I am now spending some sideline cash on brokered CDs. I had never bought those before. I did not know that they are bought at $1000, so the number of CDs I needed to buy were in the number of 1000s I wanted to put in.

I have not laddered at this point. I just put some money in for 9 months at 4.70 (or was it 4.75?) annualized rate, FDIC insured, call protected.

Now…..watch for it……there will be at least one poster who will pop in to tell me I am not keeping up with inflation. (sigh) I know that, of course.

Boomer Whipple

Great strategy, same as I doing with our money and my parents' estate.

You are correct in blue as the inflation was supply driven and very sudden, and there aren't any instruments to "buy" to keep up. However, the answer to higher prices is higher prices where capitalism wants to take advantage of it and join in the production / sales of same.
and that's where prices will fall. There were plenty of opportunities for short sales to hedge/offset increased rates.

I predict that inflation with a basis issue, will suddenly fall, and that's when very low coupon t bonds will make out tremendously with high capital gains vs interest.

There are dividend income equity ETFs which offer diversification without having to buy individual stocks to get the diversification risk reduction which i recommend as the best "simple" strategy, looking at large cap stocks + utility industry with guaranteed rates of return.

finance professional in the utility industry and formerly mergers/acquisition analyst at an investment industry supplier buying and selling investment companies.

[manaboutown]

Although Schwab's is not yet available I just downloaded yearend statements from a couple of other brokerage houses in which I hold accounts. The damage is not as bad as I feared. Yippee!

Here comes 2023!

[Babubhat]

Housing prices are only going down. You have the option of staying put. Fix your major costs. The rest can be managed.

The optimal way to pass is being deeply in debt. Let someone else hold the bag

[rsmurano]

We are not close to a bottom. You could say that we are getting closer to the bottom everyday, but nobody knows what the bottom will be.
Look at apple which is the most held stock in the world and it’s been going down almost every day. My friends have been asking me for months is it time to buy apple and I tell them wait a week and it will be cheaper, then wait another week and it will be cheaper.
I ignore these bear market rallies. You have to think about the broken system/government we have and we need changes before the market will change for the better. Passing of the omnibus bill last week will not help the stock market.