Disclaimer: the answer is always going to depend on your age and risk tolerance. Tldr: stocks/equities is probably always going to be the answer if your approach is to buy and hold and you're...
Exemplary
Disclaimer: the answer is always going to depend on your age and risk tolerance.
Tldr: stocks/equities is probably always going to be the answer if your approach is to buy and hold and you're young enough to wait out market dips. Buy and hold also only works if you don't get cold feet in a dip because I assure you, you will probably never sell at the right time and likely miss buying in before the price goes back up. If you can't stomach seeing numbers go down that's totally fine and an individual thing to assess. If that's the case then CDs are probably the best place to put money right now.
If you're young(ish) and plan to sit on your investments for 10-20 years, stocks/equity is probably going to be the best place to put money assuming you can sit on your hands and leave it alone regardless of market volitility. If you can stomach more risk, S&P500 and growth ETFs are going to be the easiest way to target high yield in diversified portfolio's. If you're slightly more risk adverse than broadmarket or even whole market ETFs are a better place (less volatile but will still see much higher returns than bonds). Note that both of these are tax advantaged compared to bonds assuming you hold them long enough that they're taxed as a capital gain instead of income when you sell. A less tax advantaged way to invest in equities but which comes with better cash flow is something like the SPYI or JEPI ETFs which I think are both technically aggressive investments so I would strongly advise against making either of these your only investment. They're not tax advantaged because they use derivative (options) contracts to generate cashflow from market volatility, but are returning about 10% annually as dividend payments. So they're taxed as income like bond payments would be, but give you a much high return (for higher risk). This may be the answer you're looking for if the question is essentially "am I going to get a better return on Bonds than Stocks with current interest rates and volatility?" So long as you have enough time to just sit on a diversified equity investment, it is probably always going to exceed the return from bonds unless there's a major restructuring of global economic systems in which case you probably have bigger problems anyway.
Interest rates have stopped increasing and will likely come back down in the next few years. This will lower the yield on bonds, but for the time being I think they're still returning higher yields than previously. If you can't have the risk of volatility then sure, bonds are still going to be much better than leaving your money in a savings account. However, I think a better alternative right now are CDs (until interest rates come down which would tip the favor back to bonds likely). It looks like a lot of CDs listed on Fidelity are still yielding 5% and you can usually set up the money to get reinvested into new CDs automatically.
Other disclaimer: I have a relevant degree, but don't actively work in finance or investing so consider my advice coming from an educated enthusiast on the topic but not an active industry expert.
You give up control of your money for the given period in exchange for the stated interest rate. For a 12 month 4.99% CD, if you paid in $1,000, you'd get back $1049.90 after that year. The...
You give up control of your money for the given period in exchange for the stated interest rate. For a 12 month 4.99% CD, if you paid in $1,000, you'd get back $1049.90 after that year. The interest rates are generally lower than you'd find elsewhere, but there's complete security and a predetermined amount of money you're going to get at the end.
If you have savings on hand for emergencies, a way to make a little bit more over keeping it in your checking is to have 3 months of savings in a trio of 3 month CD's each coming due one month after the one before. That way you're getting better returns than the 0 you'd get for it sitting in a checking account, and each month there's a CD with that month's expenses ready to spend if needed.
CDs in this context are Certificate of Deposits right? :p I'm slightly confused. Usually our banks would offer term deposit accounts, in which the money is locked away and inaccessible until...
CDs in this context are Certificate of Deposits right? :p I'm slightly confused.
Usually our banks would offer term deposit accounts, in which the money is locked away and inaccessible until maturity.
A CD is an account where, in a pinch I could use it, with a penalty or giving up on the promised interest?
I don't think I've even seen such a thing offered at my bank but it sounds better than a locked in term deposit
The money is locked in with a CD for the term, but your broker should be able to sell the CD on the secondary market if you really need the money before the time is up.
The money is locked in with a CD for the term, but your broker should be able to sell the CD on the secondary market if you really need the money before the time is up.
You can usually get it back, but I think either you don't get any interest depending on the terms of the CD, or you might actually pay a small fee instead to get most of the money back early.
You can usually get it back, but I think either you don't get any interest depending on the terms of the CD, or you might actually pay a small fee instead to get most of the money back early.
Usually its just a 1-2 month interest penalty, at least it has been for all the CD's I've used. So you lose out on some of the interest. Its not really that big of a deal.
Usually its just a 1-2 month interest penalty, at least it has been for all the CD's I've used. So you lose out on some of the interest. Its not really that big of a deal.
CDs are Certificates of Deposit. Banks sell them. You essentially loan the bank money for a specified amount of time, and at the end they give you your money back plus the interest. I haven't used...
CDs are Certificates of Deposit. Banks sell them. You essentially loan the bank money for a specified amount of time, and at the end they give you your money back plus the interest. I haven't used them personally, but from what I've heard you tend to get higher rates at credit unions than banks. They are a very secure way to save money that you won't need immediate access to and I think most banks will automatically roll your money into new CDs at the end of the term if you ask them to. So if it's something you're interested call a few local credit unions and ask what their CD rates are today (most don't maintain updated lists online I don't think). I don't think you usually need an account with the bank/credit union. Fidelity (and I'm sure other digital brokers) let's you buy CDs from banks both nationally and internationally, but the rates that I'm seeing aren't really that good. I suspect if you stop in to or call a few local places you'll find some that return more than 5% on 3-6 month CDs.
That totally answers my question, thanks! I'd never heard of those before. I know I've seen banks here in Germany have savings accounts where you can only withdraw your money after a certain...
That totally answers my question, thanks! I'd never heard of those before. I know I've seen banks here in Germany have savings accounts where you can only withdraw your money after a certain period of time, and these seem quite similar in practice (though idk if they're the same under the hood or if interest rates are comparable).
Oh that's very interesting! I'm US based so I certainly can't speak to German investment rates nor the tax advantage you might have in Germany for one investment type over another. I suspect...
Oh that's very interesting! I'm US based so I certainly can't speak to German investment rates nor the tax advantage you might have in Germany for one investment type over another. I suspect Festgeld as @tauon points out below function almost identically to CDs in the US as far as when and how they pay interest. I suspect in most countries (except for maybe Japan) they're going to be a lower risk way to get a better return than just a savings account.
The German term for them, Festgeld, may be roughly translated as “fixed (term) deposit,” which I think nicely captures what it’s about: Deposit means bank Fixed-term means no withdrawing at any...
The German term for them, Festgeld, may be roughly translated as “fixed (term) deposit,” which I think nicely captures what it’s about:
Deposit means bank
Fixed-term means no withdrawing at any given moment (without prior notice, or at all, depending on your conditions) – very much unlike a regular deposit
In return for giving your bank something to work with and plan on having for 1-2 years (or more), you’re given a form of interest payment on what’s effectively your “loan” to them
(not directly deductible from their name but) Banks are subject to rather strict conditions, and you have a (probably lower) guaranteed return meaning less risk than ETFs/stocks/the remaining “free market,” albeit more risk than government bonds in the classic model, which operate on the same concept of “loan.”
Disclaimer: I am also not an industry expert, but I looked into these things a couple years ago for my own savings planning. I hope I got it all correct.
Question about CDs if you don't mind... why do 12-month have better rates than longer term CDs? Do the financial institutions just anticipate a rate drop?
Question about CDs if you don't mind... why do 12-month have better rates than longer term CDs? Do the financial institutions just anticipate a rate drop?
12-Month CDs reflect the current rate environment, which is relatively high. Longer term CDs aren't just financial institutions 'betting' rates will go down, it is statically likely that they will...
12-Month CDs reflect the current rate environment, which is relatively high. Longer term CDs aren't just financial institutions 'betting' rates will go down, it is statically likely that they will return back to the average, an effect known as "reversion to the mean". So, long-term rates will always price in this anticipated pull toward the average, making them less sensitive to the feds rate changes.
I think this is a direct result of US government bonds rates still being higher yield for short term than long term. CDs are a form of loan from you to a bank (so the bank has debt to you). Debt...
I think this is a direct result of US government bonds rates still being higher yield for short term than long term. CDs are a form of loan from you to a bank (so the bank has debt to you). Debt markets (loans and bonds) tend to follow trends from US government bonds which in this case is creating the same shape for CDs (short term rates are high and long term rates are low for gov bonds right now). During a recession and/or a strained economy where people spend less, you tend to see short term rates go higher than long term in part because short term bonds have higher liquidity and you get your money back faster (which reduces default risk from who ever you loaned money to not being able to pay you back over a longer term). So predominantly you're seeing the cost (yield rate) of the safest loans on the market (government/Treasury bonds) setting the floor for any other debt/loans over the same terms.
That being said, having looked at the current federal yield curve it looks like CDs are basically matching the yield of government bonds so at that rate probably just look at buying government bonds directly if you like that return right now.
Otherwise investment grade bonds should give you a better return for slightly higher risk. Looks like the bond ETF (you buy ETFs like regular stocks) JAAA has yielded closer to 8.8% over the last year and averaged 4.4% over the last three years (which accounts for previously lower interest rates), so you can definitely do better than Gov Bonds/CDs if you take on extra risk.
JEPI is getting smoked by a simple index fund SPY because buy write isn't more risk. It's less risk. It caps the future performance in exchange for less tax efficient premiums now.
give you a much high return (for higher risk)
JEPI is getting smoked by a simple index fund SPY because buy write isn't more risk. It's less risk. It caps the future performance in exchange for less tax efficient premiums now.
I was referring to them returning a higher return than bonds in exchange for higher risk than bonds. They certainly do not have a higher return than a regular equity fund but I can see how my...
I was referring to them returning a higher return than bonds in exchange for higher risk than bonds. They certainly do not have a higher return than a regular equity fund but I can see how my phrasing didn't make the distinction clear.
Disclaimer as always, I am just some guy with opinions on the internet. Don't want to think about it? Pick the vanguard fund closest to your expected retirement year (2050, 2060, etc) and forget...
Disclaimer as always, I am just some guy with opinions on the internet.
Don't want to think about it? Pick the vanguard fund closest to your expected retirement year (2050, 2060, etc) and forget about the money.
If you want to use cash in the next year or so to, say, buy a house? Buy short term T Bills from TreasuryDirect, 5.2-5.4% yield with 0 risk or some fund backed by short term bills (but that will mean you're subject to state income tax instead of just federal buying bills directly).
If you want to forget about the money for a few years? CDs are always a good choice. 2 year CDs are 5% right now. 3 year CDs are ~4.6%.
I don't really recommend trying to time the market unless you want to get an ulcer. Look at the fundamentals right now, all indicators (high government spending, quantitative tightening, moderately warm services inflation, housing market frozen, high wage increases especially at the 10th percentile) make me think that the fed is still unlikely to cut rates, which is what the market has been pumping itself up over for over a year. The market has been wrong many many times before. I would suggest following classic advice and Don't Fight The Fed. Rates haven't been this high for this long in a very long time and I think people have forgotten that ZIRP is an incredibly recent invention. Save yourself the trouble and wait until the fed actually does a rate cut before buying into a market that has convinced itself such a thing is a given when it is no such thing.
In total agreement except for "save yourself the trouble and wait until the Fed actually does a rate cut before buying into a market," because most people don't have the time and knowledge base to...
In total agreement except for "save yourself the trouble and wait until the Fed actually does a rate cut before buying into a market," because most people don't have the time and knowledge base to keep up with it. Setting up reoccurring deposits and auto-investments into broadmarket ETFs is going to be a much more manageable and higher return strategy than waiting. Because I think a lot of people wait thinking they'll know the right time and it either never comes or passes them by without realizing it.
So unless someone wants to really dig into investing, the present is probably always going to be the right answer to "when should I invest" so long as they're prepared to just ignore ups and downs.
Yes, exactly, that's why I'm suggesting against timing the market. if you're going to buy into the market now you have to accept that it's possible that the fed will make a mistake when catching...
In total agreement except for "save yourself the trouble and wait until the Fed actually does a rate cut before buying into a market," because most people don't have the time and knowledge base to keep up with it.
Yes, exactly, that's why I'm suggesting against timing the market. if you're going to buy into the market now you have to accept that it's possible that the fed will make a mistake when catching the falling knife and you may lose money. If you buy into the market right now, do so via a retirement fund or other similar wide-market ETF and then forget about it. Just don't even think about it. Don't read news about finance, none of it. But if you are going to try to time the market anyway because you can't stand to see number go down, my advice is to buy bonds and watch what the fed actually does.
Unless you’re a Wall Street stock picker that needs quarterly results, just buy index funds and don’t sweat the volatility. If I could get everyone in America to read one book it would be JL...
Unless you’re a Wall Street stock picker that needs quarterly results, just buy index funds and don’t sweat the volatility.
Personally I'm very tempted to pull out my investments and go back to my 4.8% HYSA for a while. The difference in return may end up being fairly high but 4.8% is nothing to sneeze at and the...
Personally I'm very tempted to pull out my investments and go back to my 4.8% HYSA for a while. The difference in return may end up being fairly high but 4.8% is nothing to sneeze at and the market has felt incredibly "bubblelike" for a while. Feels like we're one bad world event away from a 20% correction, and with the election coming up that could be sooner than you think.
That being said I am a short term investor since I'm using the stock market to help build up my net worth for buying a house, so my situation may be a little different from yours if you are just looking to save long term for retirement. Putting money in VOO or similar funds today and just waiting 20 years will almost certainly net you healthy returns.
Looks like VUSXX's average return hasn't really been that good until this year, a 4.8% HYSA is much better and safer, especially since it doesn't have an expense ratio. Unless I'm misunderstanding...
Looks like VUSXX's average return hasn't really been that good until this year, a 4.8% HYSA is much better and safer, especially since it doesn't have an expense ratio. Unless I'm misunderstanding something.
A HYSA is subject to state tax for one, but really the bank is taking the money and buying T-bills itself. There's no explicit fee, but it's baked in. VUSXX increased with interest rates, but so...
A HYSA is subject to state tax for one, but really the bank is taking the money and buying T-bills itself. There's no explicit fee, but it's baked in. VUSXX increased with interest rates, but so did HYSAs. If rates go down, both will go down too. I expect you'll always be better off with VUSXX or equivalent.
yes for very short term, because it's backed by short term bills. fed funds rate is high, 3 month bills have ranged from 5.2-5.4%. you can also set up buying those directly, but VUSXX is better...
yes for very short term, because it's backed by short term bills. fed funds rate is high, 3 month bills have ranged from 5.2-5.4%. you can also set up buying those directly, but VUSXX is better return than the HYSA + less work than dealing with Treasurydirect itself.
if you put money in VUSXX you will want to periodically (every few months) check what the EFFR (effective fed funds rate) is to see what the return of short term bills is, and reinvest if it drops.
geopolitical ramblings, why I worry about a market correction, kind of related but not sure it's the most on topic
I personally am of the opinion that the real reason for inflation is geopolitical instability + peak oil, because the movement on the energy transition has been very very rapid lately and hallucinatory businesses (gambling, AI, most crypto, etc) will simply need to go away as very real economic cutbacks occur to finally manage emissions.
My view is that this is an economy reconfiguring itself, and that while very old school investments (broad market index funds held for decades, real estate, highly rated corporate + government bonds) will be fine, if you need the money to do something like buy a house, you don't want to run the risk of some asshole in Manhattan's coke addiction resulting in you losing several thousand dollars. It won't matter in the long run, sure, but in the short term you could be unable to make a down payment and that would suck. The only thing that would result in you not getting your money out of a government backed bond fund like this would be the government defaulting, and if that happens we're all in a world of hurt.
I don't have one, but this may be helpful. https://github.com/bpc-clone?tab=repositories It can be installed on mobile Firefox on Android, if you're on your phone. (unfortunately, due to Apple...
Ask Tildes: should one buy less stocks and go more into bonds because of interest rates and incoming market volatility?
Disclaimer: the answer is always going to depend on your age and risk tolerance.
Tldr: stocks/equities is probably always going to be the answer if your approach is to buy and hold and you're young enough to wait out market dips. Buy and hold also only works if you don't get cold feet in a dip because I assure you, you will probably never sell at the right time and likely miss buying in before the price goes back up. If you can't stomach seeing numbers go down that's totally fine and an individual thing to assess. If that's the case then CDs are probably the best place to put money right now.
If you're young(ish) and plan to sit on your investments for 10-20 years, stocks/equity is probably going to be the best place to put money assuming you can sit on your hands and leave it alone regardless of market volitility. If you can stomach more risk, S&P500 and growth ETFs are going to be the easiest way to target high yield in diversified portfolio's. If you're slightly more risk adverse than broadmarket or even whole market ETFs are a better place (less volatile but will still see much higher returns than bonds). Note that both of these are tax advantaged compared to bonds assuming you hold them long enough that they're taxed as a capital gain instead of income when you sell. A less tax advantaged way to invest in equities but which comes with better cash flow is something like the SPYI or JEPI ETFs which I think are both technically aggressive investments so I would strongly advise against making either of these your only investment. They're not tax advantaged because they use derivative (options) contracts to generate cashflow from market volatility, but are returning about 10% annually as dividend payments. So they're taxed as income like bond payments would be, but give you a much high return (for higher risk). This may be the answer you're looking for if the question is essentially "am I going to get a better return on Bonds than Stocks with current interest rates and volatility?" So long as you have enough time to just sit on a diversified equity investment, it is probably always going to exceed the return from bonds unless there's a major restructuring of global economic systems in which case you probably have bigger problems anyway.
Interest rates have stopped increasing and will likely come back down in the next few years. This will lower the yield on bonds, but for the time being I think they're still returning higher yields than previously. If you can't have the risk of volatility then sure, bonds are still going to be much better than leaving your money in a savings account. However, I think a better alternative right now are CDs (until interest rates come down which would tip the favor back to bonds likely). It looks like a lot of CDs listed on Fidelity are still yielding 5% and you can usually set up the money to get reinvested into new CDs automatically.
Other disclaimer: I have a relevant degree, but don't actively work in finance or investing so consider my advice coming from an educated enthusiast on the topic but not an active industry expert.
This might be a silly question but for the less financially-educated among us, what are CDs? Besides the thing people used to play music on.
You give up control of your money for the given period in exchange for the stated interest rate. For a 12 month 4.99% CD, if you paid in $1,000, you'd get back $1049.90 after that year. The interest rates are generally lower than you'd find elsewhere, but there's complete security and a predetermined amount of money you're going to get at the end.
If you have savings on hand for emergencies, a way to make a little bit more over keeping it in your checking is to have 3 months of savings in a trio of 3 month CD's each coming due one month after the one before. That way you're getting better returns than the 0 you'd get for it sitting in a checking account, and each month there's a CD with that month's expenses ready to spend if needed.
CDs in this context are Certificate of Deposits right? :p I'm slightly confused.
Usually our banks would offer term deposit accounts, in which the money is locked away and inaccessible until maturity.
A CD is an account where, in a pinch I could use it, with a penalty or giving up on the promised interest?
I don't think I've even seen such a thing offered at my bank but it sounds better than a locked in term deposit
The money is locked in with a CD for the term, but your broker should be able to sell the CD on the secondary market if you really need the money before the time is up.
I don't believe you can pull the money early; I'd confirm that detail with your financial institution.
You can usually get it back, but I think either you don't get any interest depending on the terms of the CD, or you might actually pay a small fee instead to get most of the money back early.
Usually its just a 1-2 month interest penalty, at least it has been for all the CD's I've used. So you lose out on some of the interest. Its not really that big of a deal.
CDs are Certificates of Deposit. Banks sell them. You essentially loan the bank money for a specified amount of time, and at the end they give you your money back plus the interest. I haven't used them personally, but from what I've heard you tend to get higher rates at credit unions than banks. They are a very secure way to save money that you won't need immediate access to and I think most banks will automatically roll your money into new CDs at the end of the term if you ask them to. So if it's something you're interested call a few local credit unions and ask what their CD rates are today (most don't maintain updated lists online I don't think). I don't think you usually need an account with the bank/credit union. Fidelity (and I'm sure other digital brokers) let's you buy CDs from banks both nationally and internationally, but the rates that I'm seeing aren't really that good. I suspect if you stop in to or call a few local places you'll find some that return more than 5% on 3-6 month CDs.
Let me know if I addressed your question or not!
That totally answers my question, thanks! I'd never heard of those before. I know I've seen banks here in Germany have savings accounts where you can only withdraw your money after a certain period of time, and these seem quite similar in practice (though idk if they're the same under the hood or if interest rates are comparable).
Oh that's very interesting! I'm US based so I certainly can't speak to German investment rates nor the tax advantage you might have in Germany for one investment type over another. I suspect Festgeld as @tauon points out below function almost identically to CDs in the US as far as when and how they pay interest. I suspect in most countries (except for maybe Japan) they're going to be a lower risk way to get a better return than just a savings account.
The German term for them, Festgeld, may be roughly translated as “fixed (term) deposit,” which I think nicely captures what it’s about:
Disclaimer: I am also not an industry expert, but I looked into these things a couple years ago for my own savings planning. I hope I got it all correct.
Question about CDs if you don't mind... why do 12-month have better rates than longer term CDs? Do the financial institutions just anticipate a rate drop?
12-Month CDs reflect the current rate environment, which is relatively high. Longer term CDs aren't just financial institutions 'betting' rates will go down, it is statically likely that they will return back to the average, an effect known as "reversion to the mean". So, long-term rates will always price in this anticipated pull toward the average, making them less sensitive to the feds rate changes.
I think this is a direct result of US government bonds rates still being higher yield for short term than long term. CDs are a form of loan from you to a bank (so the bank has debt to you). Debt markets (loans and bonds) tend to follow trends from US government bonds which in this case is creating the same shape for CDs (short term rates are high and long term rates are low for gov bonds right now). During a recession and/or a strained economy where people spend less, you tend to see short term rates go higher than long term in part because short term bonds have higher liquidity and you get your money back faster (which reduces default risk from who ever you loaned money to not being able to pay you back over a longer term). So predominantly you're seeing the cost (yield rate) of the safest loans on the market (government/Treasury bonds) setting the floor for any other debt/loans over the same terms.
That being said, having looked at the current federal yield curve it looks like CDs are basically matching the yield of government bonds so at that rate probably just look at buying government bonds directly if you like that return right now.
Otherwise investment grade bonds should give you a better return for slightly higher risk. Looks like the bond ETF (you buy ETFs like regular stocks) JAAA has yielded closer to 8.8% over the last year and averaged 4.4% over the last three years (which accounts for previously lower interest rates), so you can definitely do better than Gov Bonds/CDs if you take on extra risk.
JEPI is getting smoked by a simple index fund SPY because buy write isn't more risk. It's less risk. It caps the future performance in exchange for less tax efficient premiums now.
I was referring to them returning a higher return than bonds in exchange for higher risk than bonds. They certainly do not have a higher return than a regular equity fund but I can see how my phrasing didn't make the distinction clear.
Disclaimer as always, I am just some guy with opinions on the internet.
Don't want to think about it? Pick the vanguard fund closest to your expected retirement year (2050, 2060, etc) and forget about the money.
If you want to use cash in the next year or so to, say, buy a house? Buy short term T Bills from TreasuryDirect, 5.2-5.4% yield with 0 risk or some fund backed by short term bills (but that will mean you're subject to state income tax instead of just federal buying bills directly).
If you want to forget about the money for a few years? CDs are always a good choice. 2 year CDs are 5% right now. 3 year CDs are ~4.6%.
I don't really recommend trying to time the market unless you want to get an ulcer. Look at the fundamentals right now, all indicators (high government spending, quantitative tightening, moderately warm services inflation, housing market frozen, high wage increases especially at the 10th percentile) make me think that the fed is still unlikely to cut rates, which is what the market has been pumping itself up over for over a year. The market has been wrong many many times before. I would suggest following classic advice and Don't Fight The Fed. Rates haven't been this high for this long in a very long time and I think people have forgotten that ZIRP is an incredibly recent invention. Save yourself the trouble and wait until the fed actually does a rate cut before buying into a market that has convinced itself such a thing is a given when it is no such thing.
In total agreement except for "save yourself the trouble and wait until the Fed actually does a rate cut before buying into a market," because most people don't have the time and knowledge base to keep up with it. Setting up reoccurring deposits and auto-investments into broadmarket ETFs is going to be a much more manageable and higher return strategy than waiting. Because I think a lot of people wait thinking they'll know the right time and it either never comes or passes them by without realizing it.
So unless someone wants to really dig into investing, the present is probably always going to be the right answer to "when should I invest" so long as they're prepared to just ignore ups and downs.
Yes, exactly, that's why I'm suggesting against timing the market. if you're going to buy into the market now you have to accept that it's possible that the fed will make a mistake when catching the falling knife and you may lose money. If you buy into the market right now, do so via a retirement fund or other similar wide-market ETF and then forget about it. Just don't even think about it. Don't read news about finance, none of it. But if you are going to try to time the market anyway because you can't stand to see number go down, my advice is to buy bonds and watch what the fed actually does.
Gotcha, now I'm tracking. 👌
Unless you’re a Wall Street stock picker that needs quarterly results, just buy index funds and don’t sweat the volatility.
If I could get everyone in America to read one book it would be JL Collins’ Simple Path to Wealth
You can beat 80% of hedge funds by just buying the index and holding it until you retire.
Personally I'm very tempted to pull out my investments and go back to my 4.8% HYSA for a while. The difference in return may end up being fairly high but 4.8% is nothing to sneeze at and the market has felt incredibly "bubblelike" for a while. Feels like we're one bad world event away from a 20% correction, and with the election coming up that could be sooner than you think.
That being said I am a short term investor since I'm using the stock market to help build up my net worth for buying a house, so my situation may be a little different from yours if you are just looking to save long term for retirement. Putting money in VOO or similar funds today and just waiting 20 years will almost certainly net you healthy returns.
if you're buying a house soon 100% put your money in a HYSA or imo my pick has been VUSXX since it's just as liquid.
Looks like VUSXX's average return hasn't really been that good until this year, a 4.8% HYSA is much better and safer, especially since it doesn't have an expense ratio. Unless I'm misunderstanding something.
A HYSA is subject to state tax for one, but really the bank is taking the money and buying T-bills itself. There's no explicit fee, but it's baked in. VUSXX increased with interest rates, but so did HYSAs. If rates go down, both will go down too. I expect you'll always be better off with VUSXX or equivalent.
yes for very short term, because it's backed by short term bills. fed funds rate is high, 3 month bills have ranged from 5.2-5.4%. you can also set up buying those directly, but VUSXX is better return than the HYSA + less work than dealing with Treasurydirect itself.
if you put money in VUSXX you will want to periodically (every few months) check what the EFFR (effective fed funds rate) is to see what the return of short term bills is, and reinvest if it drops.
geopolitical ramblings, why I worry about a market correction, kind of related but not sure it's the most on topic
I personally am of the opinion that the real reason for inflation is geopolitical instability + peak oil, because the movement on the energy transition has been very very rapid lately and hallucinatory businesses (gambling, AI, most crypto, etc) will simply need to go away as very real economic cutbacks occur to finally manage emissions.
My view is that this is an economy reconfiguring itself, and that while very old school investments (broad market index funds held for decades, real estate, highly rated corporate + government bonds) will be fine, if you need the money to do something like buy a house, you don't want to run the risk of some asshole in Manhattan's coke addiction resulting in you losing several thousand dollars. It won't matter in the long run, sure, but in the short term you could be unable to make a down payment and that would suck. The only thing that would result in you not getting your money out of a government backed bond fund like this would be the government defaulting, and if that happens we're all in a world of hurt.
Do you have a mirror for us Poor's?
I don't have one, but this may be helpful.
https://github.com/bpc-clone?tab=repositories
It can be installed on mobile Firefox on Android, if you're on your phone. (unfortunately, due to Apple policy, you're SOL on an iPhone)