Originally Posted by manaboutown (Post 2188215)

I remember the fed rate got up to about 19% in the early 1980s. Those were crazy unstable times IMHO. These are crazy unstable times, too, but for different reasons and in different ways. I have no idea where it will go so remain defensive, in short term T-bills except for good solid stocks I have held a long time such as BRK.

Originally Posted by melpetezrinski (Post 2188359)

5% interest risk free is too good to pass up. I just locked in a MYGA @ 5.4% for 5 years in a retirement account. It's my first foray into annuities, so I didn't commit much.

Originally Posted by CoachKandSportsguy (Post 2188453)

the question is why use an MYGA annuity instrument for this purpose in an IRA? What is the advantage over buying 5 year CDs, 5 year treasuries or 5 year corporate bonds with similar interest rates?

Second, did you pay a front end load fee for this annuity?
Third, since there is no taxes in an IRA, why pay for a tax deferred annuity?

thanks, just curious as to what am i missing as this is not my first, second or third choice for IRA instruments. .

Originally Posted by CoachKandSportsguy (Post 2188453)

the question is why use an MYGA annuity instrument for this purpose in an IRA? What is the advantage over buying 5 year CDs, 5 year treasuries or 5 year corporate bonds with similar interest rates?

Second, did you pay a front end load fee for this annuity?
Third, since there is no taxes in an IRA, why pay for a tax deferred annuity?

thanks, just curious as to what am i missing as this is not my first, second or third choice for IRA instruments. .

Originally Posted by CoachKandSportsguy (Post 2188453)

the question is why use an MYGA annuity instrument for this purpose in an IRA? What is the advantage over buying 5 year CDs, 5 year treasuries or 5 year corporate bonds with similar interest rates?

Second, did you pay a front end load fee for this annuity?
Third, since there is no taxes in an IRA, why pay for a tax deferred annuity?

thanks, just curious as to what am i missing as this is not my first, second or third choice for IRA instruments. .

Originally Posted by retiredguy123 (Post 2188459)

The answer is simple. The salesperson delivered a great, but dishonest, sales pitch and made a huge commission.

Originally Posted by manaboutown (Post 2188160)

The Fed rate, that is. Many of us remember the 1970s and 1980s and what happened back then, high inflation, very high interest rates.

How can a portfolio be positioned in preparation?

Any ideas or suggestions?

Originally Posted by retiredguy123 (Post 2188189)

Not sure I understand your post. Typically, if you buy a new Treasury bond and hold it until maturity, you will pay income tax on the interest earned annually, regardless of the term of the bond. There are no capital gains. The only way to earn capital gains on a Treasury bond is to buy it at a discount and sell it for a higher price than you paid for it. Are you buying over-the-counter bonds at a discount?

Originally Posted by melpetezrinski (Post 2188242)

Borrow at 1% and invest at 2,3,4%. This is the main reason why we are in an inflation crisis. The fed kept rates too low for WAY too long. Do you remember when rates were actually negative in certain countries? Why wouldn't you borrow free money? We are the land of consumerism. Of course we are going to borrow and spend. Household debt just reached a record 16 TRILLION. Household debt surpasses $16.5T in Q3 amid inflation, rising demand: NY Fed report | Fox Business. Of course companies are going to borrow to grow their business. Heck, even Apple is borrowing money with a staggering 51 BILLION dollars in cash. Something is rotten in the state of Denmark and it's not my $1 eggs.

Originally Posted by Michael G. (Post 2188228)

I remember in the 80's when interest rates were high.
I also remember leaving work one day when interest was 19%
Went to the bank and borrowed $5,000 at 12% and invested it at 19%.
Ay.... to be young again.

Originally Posted by manaboutown (Post 2188160)

The Fed rate, that is. Many of us remember the 1970s and 1980s and what happened back then, high inflation, very high interest rates.

How can a portfolio be positioned in preparation?

Any ideas or suggestions?

Originally Posted by MandoMan (Post 2188658)

According to a couple friends who are big boys in banking and mutual funds, interest rates will be lower by year’s end than now, the inflation rate is going to drop a lot, and if there is a recession, it will be short and small. Paul Krugman is saying the same, and some analysts in the WSJ, and I hear also some major European banks. Maybe they are all just trying to raise our spirits, but it was enough for me to put everything back in stock-based mutual funds.

Originally Posted by manaboutown (Post 2188215)

I remember the fed rate got up to about 19% in the early 1980s. Those were crazy unstable times IMHO. These are crazy unstable times, too, but for different reasons and in different ways. I have no idea where it will go so remain defensive, in short term T-bills except for good solid stocks I have held a long time such as BRK.

Originally Posted by Vermilion Villager (Post 2188700)

Not going to be getting myself in jail for being political but I believe the time you were referring to is 2018 to 2020. I seem to recall a lot of "tweets" by a particular individual strong arming the Fed chair to keep the rates low… It just so happened there was an election on the horizon at the same time. Hmmmm.......
Pretty sure history will too put this in the proper perspective.:mornincoffee:

Originally Posted by daniel200 (Post 2188694)

I prefer to purchase Treasuries on the secondary market (Fidelity) and not newly issued bonds. A bond that was issued at 1% will trade at a discount so that its total yield to maturity (interest plus capital gains) is similar to current yields (about 4.6% for a 2 year t-bill) … So if I buy a 1% bond that matures in 2 years; I will pay taxes on the 1% interest yearly. When the bond matures in 2 years, I will have a long term capital gain of (4.6% - 1%) x 2 = 7.2% when i file my taxes