Reply
Regular Social Butterfly

Any decent safe investment return ideas?

With CD, Treasury rates in the **bleep**ter and equities way too overpriced (FOMO, TINA and Fed bubble blowing) any decent return ideas, experience.  Was using FR annuities but even they have fallen. 

 

Best 2 year yield I find is 1.75%, 3 year at 2.15%.   

0 Kudos
1,302 Views
21
Report
2 ACCEPTED SOLUTIONS
Super Contributor

@Gorm50 

If you are looking for safety and a reasonable return, take a look at I - Bonds. These are the inflation adjusted version of the old savings bonds called EE Bonds. They are currently paying 1.68% for 6 months for I - Bonds purchased through April 2020. After May 3, 2020 (because May 1, 2020 is a Saturday), they will pay 3.54% for six months for I- Bonds purchased from May 3, 2020 through October 2020. The interest changes every 6 months based on non-seasonally adjusted U.S. inflation. You may have noticed that inflation has been increasing as indicated by the cost of gasoline which is a contributing factor. You will not get rich with I- Bonds, but will at least earn the rate of inflation. So, in theory, your money does not lose purchasing power. I - Bonds are not traded so cannot lose your money. They cannot be redeemed before 1 year. If redeem between 1 year and 5 years, you loose only 3 months of interest. In my opinion, the only negative is you are limited to $10,000 per year/per person. There is a provision that you may buy up to $5,000 additional from a FIT refund. Some folks overpay FIT just to obtain an additional $5,000 per year. Hopefully, I added the Treasury Direct website https://www.treasurydirect.gov/indiv/research/indepth/ibonds/res_ibonds_iratesandterms.htm#comb

View solution in original post

0 Kudos
1,267 Views
9
Report
Honored Social Butterfly

You can always invest (SOME) of your money in a relatively safe utility like ATT or Verizon.  They cost (respectively) $30 and roughly $60 and pay a handsome 6.8% and 4.3% and what's even better, you get the dividend rate for income taxes!

View solution in original post

Regular Contributor

I doubt I'd give any advice to anybody because I don't follow what people my age are advised to do. I don't touch bonds, CDs, and the like. I put half in real estate, one quarter in index funds, and another quarter in single stocks. Just in case, I keep cash to last me at least two years. As far as investing goes, I don't bother my mind as to who is in the White House.

Wanjiru Warama
1
Kudos
4909
Views
0 Kudos
1,152 Views
0
Report
Honored Social Butterfly

You can always invest (SOME) of your money in a relatively safe utility like ATT or Verizon.  They cost (respectively) $30 and roughly $60 and pay a handsome 6.8% and 4.3% and what's even better, you get the dividend rate for income taxes!

View solution in original post

Regular Social Butterfly

Thank you!  This would be a great prospect on the next correction, ie snag a decent dividend AFTER the principal hit.  

7
Kudos
20153
Views
0 Kudos
1,221 Views
5
Report
Honored Social Butterfly

These stocks don't change too much but vary by a few dollars giving a greater or lesser dividend yield.  I think it's a good idea to diversify so don't ever put all your money in one location  - better than banks paltry interest rate.

0 Kudos
1,059 Views
4
Report
Regular Social Butterfly

All good points. Believe me I spread it around. Was thinking inflation a threat but just read report showing our 4 major banks have enjoyed a surge in deposits but suffered NO loan growth, suggesting all the Fed's liquidity since 2008 has ended up in the banks' liabilities, not out spurring growth.  That tells me our Fed knows their plan is NOT working to spur economic growth, and we are more likely to face deflation UNLESS loan demand picks up.  

0 Kudos
976 Views
3
Report
Honored Social Butterfly

I think the inflation will really hit home when the Climate Change/Infrastructure bill ever gets passed.  Then to pay for it, we have more taxes coming or at least an inflation that we never bargained for.  Start those presses ($$$$) running 24/7 to pay for all this "stuff".

0 Kudos
946 Views
2
Report
Regular Social Butterfly

 

You may be correct BUT it amazes as to how many have predicted since 2008 hyperinflation awaited us because all central banks have been papering the world with plentiful and cheap liquidity. NOW, Biden, via fiscal, wants to pepper us with fiscal trillions.  STILL, no one can get above 2%. While the markets are flooded with liquidity seems like equities and RE have been the principal beneficiaries. Velocity is flat, meaning dollars are not turning.  When I read that our top 4 financials have since 2008 amassed $10T increase in deposits over outstanding loans, tells me the CB intent is NOT being realized. Having more gas does NOT make an engine perform better until employed!!

Time will tell. God knows capital markets are all screwed up, given FOMO and TINA.  

0 Kudos
881 Views
1
Report
Honored Social Butterfly

Having more gas does NOT make an engine perform better until employed!!

 

I agree but have no control over the benefits of not working.  Some can make more money staying home than working and I see that as a theme.

0 Kudos
861 Views
0
Report
Super Contributor

@Gorm50 

If you are looking for safety and a reasonable return, take a look at I - Bonds. These are the inflation adjusted version of the old savings bonds called EE Bonds. They are currently paying 1.68% for 6 months for I - Bonds purchased through April 2020. After May 3, 2020 (because May 1, 2020 is a Saturday), they will pay 3.54% for six months for I- Bonds purchased from May 3, 2020 through October 2020. The interest changes every 6 months based on non-seasonally adjusted U.S. inflation. You may have noticed that inflation has been increasing as indicated by the cost of gasoline which is a contributing factor. You will not get rich with I- Bonds, but will at least earn the rate of inflation. So, in theory, your money does not lose purchasing power. I - Bonds are not traded so cannot lose your money. They cannot be redeemed before 1 year. If redeem between 1 year and 5 years, you loose only 3 months of interest. In my opinion, the only negative is you are limited to $10,000 per year/per person. There is a provision that you may buy up to $5,000 additional from a FIT refund. Some folks overpay FIT just to obtain an additional $5,000 per year. Hopefully, I added the Treasury Direct website https://www.treasurydirect.gov/indiv/research/indepth/ibonds/res_ibonds_iratesandterms.htm#comb

View solution in original post

0 Kudos
1,268 Views
9
Report
Honored Social Butterfly

I like Utilities and there yields along with stocks that are in the consumer staples and tech stocks and tech funds. 


I like to invest and have done so for over 50 years. 

Kid
0 Kudos
471 Views
0
Report
Regular Social Butterfly

Exploring the potential, assuming inflation were to take off without destroying the USD, I find I can move IRA dollars to either I bonds or TIPS without limit but need a custodian to hold bonds in paper form.  Can find NO broker nor bank willing to fulfill that role. Understand I can petition IRS with my OWN candidate but the account must be titled in THEIR name, FBO me, using their TIN.  Anyone ever do this with Trad IRAs?  How tough it is to either find a custodian or CREATE one?

0
Kudos
4905
Views
0 Kudos
662 Views
7
Report
Super Contributor

@Gorm50 

I believe I-Bonds are not available in an IRA. The interest is tax deferred until the I-Bond is redeemed. The maximum holding period is 30 years. You can hold I-Bonds in a Trust (Irrevocable or Revocable). Depending on the language and type of Trust, you may have comparable protection similar to an IRA. Check with an attorney regarding protecting the assets from creditors. In the other hand, TIPS can be held in an IRA. It makes sense to hold TIPS in a tax deferred account such as an IRA to avoid reporting annual "phantom" income tax. Please note TIPS are currently getting bid up by the Big Money Players. Yesterday the Treasury auctioned 5 year TIPS that were bid up to $109 and a fraction. That means a $1,000 TIP was bought/trading at about $1,090 which is a 9% premium. That is expensive. In my opinion, the I-Bond is the better strategy. 

0 Kudos
644 Views
6
Report
Regular Social Butterfly

Thank you, Tonster!

You are correct about I Bond being unavailable to IRA. Can't tell you the number of FALSE Google info sources, ie NO $10k cap on IRA purchases, find or create an IRA custodian, etc.  Just goes to prove the internet is not always a reliable source!.  

Got call from Treasury and they confirmed NO I Bond IRAs, NO paper, all electronic.  

Had thought, for diversification,  I would lay off some IRA $$$ in I bonds just in case Biden and Powell $$$ printing ignite inflation.

 

0 Kudos
578 Views
5
Report
Super Contributor

@Gorm50 

I am not sure if any additional Biden Bucks will create some inflation. So far, the two Trump stimulus programs and Biden's first stimulus program has not increased inflation. It appears that Businesses and Consumers are not spending the stimulus money. Obviously, there are some folks that need the money for food, shelter, healthcare, etc. However, the majority have saved the stimulus money as evidenced by your posting a few days ago wherein Bank deposits have increased significantly. Our economy needs that money to move (i.e., velocity of money) as you indicated. If the Consumers do not spend money, then Businesses should borrow that money and create products or invest in Plant and Equipment. Neither Businesses and/or Consumers are spending. In fact, both are saving. This is a major contributing factor why our economy has not inflated. One would think that the Biden Administration would have been on top of these Economics 101 Course concepts. However, what did the BA do? Throw more money to Businesses and Consumers to save. And, the BA is planning to send more money to Businesses and Consumers. You may remember that prior to the November Election, Pelosi and Shumer were proposing to Trump to increase the second Stimulus to some unbelievable amount in the area of $3.5 Trillion. As I recall, Trump was in favor of some larger amount with $2,000 going to eligible Americans. Thank God the Senate put the brakes on and the  second Stimulus was under $1 Trillion with only $600 going to eligible Americans. In all honesty, I believe millions of Americans did not need $600. I believe the issue to be aware of is deflation. That will be devastating similar to the Japan experience. As a secondary protection for short duration money, the I -Bond does not deflate like a TIP. So, you will always get your principal returned. The only loss is three months of interest if you redeem between 1 year and 5 years. After 5 years, there is no loss. You will not get rich, but you will not lose. One strategy to implement is create a ladder, perhaps 5 year, so you have annual liquidity at no interest loss. However, there is nothing wrong with getting out longer in time. If you pass before using any of the money, you designate a beneficiary. You can own jointly as well. Good Luck, 

3
Kudos
18368
Views
0 Kudos
547 Views
4
Report
Regular Social Butterfly

After the great recession I certainly believed with all the injected liquidity we'd see some inflation, but there are only two varieties, ie cost push and demand pull and neither was or is here today.  CBs HATE deflation. Maybe that is why Powell and Yellen have NO problem with all this fiscal debt, but, as you point out it does not seem to be working.  Problem is so little of it is invested.  It is JUST SPENT, WASTED on pet programs like they need to do it all before Nov 2022. Still, we have all the long running unresolved, ie entitlement restructuring, education, healthcare that beg attention.  FACT was ONLY the US economy was doing well before CV19.  Have to wonder how some of these really hurting EUs will fare "IF" we come out of this soon.  Sure doesn't look like it.    

Figure when this market corrects I'd buy some dividend stocks, but want to lay some IRA dollars off in metals or something secure as a hedge against the wheels coming off our wagon.  I am not accustomed to fiscal and monetary being so seemingly irresponsible.

This is certainly different than anything I've experienced.  I am more into preserving my capital than growing it, as even as conservative as I am outstandings just continue to increase.  

 

0 Kudos
533 Views
3
Report
Regular Social Butterfly

Amen! Must admit NOTHING is normal today. We are printing money like never before.  I certainly question the viability of the USD. Am just exploring options to further diversify $$$.  

0 Kudos
747 Views
1
Report
Regular Social Butterfly

NBC Today said NOT this year but Todd expects BOTH DC and Puerto Rico to be States by end of the decade.  I find NO ONE believing Supreme Court increase likely. 

Already Secure Act did a job on my plan to distribute IRA $$$.  

0 Kudos
650 Views
0
Report
Moderator
Moderator

Hello everyone. Please keep the thread on topic, which is

"Any decent safe investment return ideas?"

 





Thank you for your cooperation in making the AARP Community a safe and welcoming place for all.
http://community.aarp.org/t5/custom/page/page-id/Guidelines

0 Kudos
436 Views
0
Report
Conversationalist

In no way am I a financial advisor or even a check book balancer. But I do follow a company with the unfortunate name of Motley Fool for stock tips, some of which I've taken, many of which I've ignored. They do have a way higher than average success rate of picking stocks that have done well during the pandemic year, and I've done okay with their recommendations and principle of holding stocks at least 5 years. Might be worth checking them out.

Regular Contributor

I would steer well clear of individual equities if you are looking for safety, especially now.  The chickens will have to come home to roost soon!

0 Kudos
727 Views
1
Report
Honored Social Butterfly


@sktn77a wrote:

I would steer well clear of individual equities if you are looking for safety, especially now.  The chickens will have to come home to roost soon!


I strongly disagree.

 

Almost every sector stands to skyrocket as we beat the pandemic.

 

From retail, to travel, to consumer goods, to infrastructure, to almost everything except the so called "stay at home" stocks, like Zoom, we will see a demand not seen since right after World War II.

 

Now, of course, this prediction is predicated on beating the pandemic.

The "hesitant" part of the population, ironically, seems to be the same part of the population that holds the majority of individual equities in their portfolio.

0 Kudos
518 Views
0
Report
cancel
Showing results for 
Show  only  | Search instead for 
Did you mean: 
Users
Announcements

AARP Virtual Community Center 

Offering a wide variety of FREE interactive, online events and classes designed for learning, self-improvement, and fun. Learn More

Members Can Play More

Membership unlocks free online games and puzzles including classic Atari Games. Join today for just $12 per year with Automatic Renewal.

AARP Membership

AARP Rewards

Activate AARP Rewards to earn points for games, quizzes and videos. Redeem for deals and discounts. Get started with AARP Rewards now!

AARP Rewards Badge

Music and Brain Health

From soft jazz to hard rock - discover music's mental, social and physical benefits. Learn more.

Music and Brain Health