Talk of The Villages Florida - Rentals, Entertainment & More
Talk of The Villages Florida - Rentals, Entertainment & More
#31
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About two weeks ago I increased my allocation to fixed income by purchasing two-year Treasuries paying 4.7%. My thinking was, do I sell equities and their upside (and downside) chances in exchange for a U.S. Treasury bond with NO downside risk but an annual payment of 4.7%? With the strong prospect of a recession facing us in ‘23, probably with more stock market downside, it was an easy decision.
I’m still allocated about 1/3 to equities, all blue chip companies, some paying 2-3% dividends. When the recession is over and our economy and the stock market begins to rebound, I’ll reallocate back to equities. Will I miss the rebound? Sure, but limiting further losses by owning Treasuries paying a reasonable dividend is worth it. I’ll make sure to keep a portion of the portfolio in very short maturities or cash, to be able to roll over into even higher paying bonds or to begin buying stocks when the economic recovery becomes apparent. As far as the inflation rate being higher than the bond yield, the higher inflation rate only becomes applicable when you actually spend the money. Until then it’s purely a risk-reward investment consideration.
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Politicians are like diapers--they should be changed frequently, and for the same reason. Last edited by Villages Kahuna; 11-22-2022 at 05:04 AM. |
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#32
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#33
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FYI: you can also sell CDs purchased through Fidelity on the open market. I will need to check if the proceeds are are taxed as cap gains. |
#34
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#35
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#36
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I remember a few months ago that I mentioned buying gold as an inflation and investment method. Immediately I was hammered about crypto being being better than gold. Well I have gold in my hands. I can touch it and enjoy watching the gold market. Wonder how that crypto investor feels right now.
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#37
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#38
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#39
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I bonds have a low limit but treasury bills have much higher limits. I purchased in excess of $200 K treasury bills on one auction day.
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#40
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Because I can tell the difference between the yahoos and those that know what they are talking about. |
#41
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#42
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#43
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Well, I for one appreciate the serious responses. Most of the folks who were able to retire and move to The Villages got here through hard work and persevered in managing their finances well enough to retire here. We all have different investment experiences and outlooks but apparently most of them worked at least well enough to get and sustain us here.
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"No one is more hated than he who speaks the truth." Plato “To argue with a person who has renounced the use of reason is like administering medicine to the dead.” Thomas Paine |
#44
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I personally like hearing others thoughts & strategies. Knowledge is priceless
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#45
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CD's
Most folks that play in the stock market at an older age do it as a hobby. You don't gamble what you can't afford to lose. Folks living off of their money are glad to see cd rates up from
2%. 5-10 years rates are lower because banks believe that rates will go back down in the short term. You can get 5+ % on 5-10 year cd's, BUT, they are not call protected. This means banks can call, redeem, them at their whim. That whim happens when interest rates go back down, like in a recession to promote business. Goal is to get the longest term protected rate you can, then sleep easy. The federal reserve, does what it says it will do. Stock people try to bend and twist their meaning. The rate will go to 5 or 6 until inflation starts to cave. Then it will sit there for awhile, the banks are saying 2-3 years. Enjoy that guaranteed money while you can. Stock pickers are just playing bingo with the market as they don't have much to do. Get out and enjoy what life you have left. Inflation is a supply side issue that will still take 2-3 years or more to conquer. Sleep better at nite with fixed income. That window will close soon enough. BUT, if you really enjoy playing Bingo, have at it, just stop complaining. |
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