Fear of bonds

[Dash man]

Think the Yellen statement will make a difference?

Why would it? The only thing I believe could save us is if the people we've elected actually grew up and put politics aside. We need to cut spending and responsibly raise taxes to balance the budget and begin reducing the debt. If the Fed could manage inflation allowing it to grow 2-3% with a balanced budget we'd get out of this mess. The regulatory stranglehold needs to be eased since most of what they've done will do little to help stabilize the economy and doesn't contribute to growth. Less Federal spending should go for political payback and more for infrastructure improvements managed by the states. But these things will never happen, so I believe we are in for a wild ride within the next ten years.

 

[imoldernu]

Why would it? The only thing I believe could save us is if the people we've elected actually grew up and put politics aside. We need to cut spending and responsibly raise taxes to balance the budget and begin reducing the debt. If the Fed could manage inflation allowing it to grow 2-3% with a balanced budget we'd get out of this mess. The regulatory stranglehold needs to be eased since most of what they've done will do little to help stabilize the economy and doesn't contribute to growth. Less Federal spending should go for political payback and more for infrastructure improvements managed by the states. But these things will never happen, so I believe we are in for a wild ride within the next ten years.

About the tax part...

 

[Dash man]

About the tax part...

What's your point?

 

[imoldernu]

What's your point?

Yes... It seems to me, that the "cutting spending and responsibly raising taxes" never seems to get beyond the "Cutting Spending " part.

I agree with your post, completely... and the caveat of Taxes makes me wonder if ten years would in any way make a difference.

 

[Dash man]

Yes... It seems to me, that the "cutting spending and responsibly raising taxes" never seems to get beyond the "Cutting Spending " part.



I agree with your post, completely... and the caveat of Taxes makes me wonder if ten years would in any way make a difference.

One side refuses to cut spending and only wants to tax the rich, while the other side refuses to increase taxes and talks spending cuts but still goes for pet project spending. What we need is responsible people in government...so we're in trouble.

 

[pb4uski]

Looks like we're on a porky-laden tangent to me.

 

[Fermion]

Looks like we're on a porky-laden tangent to me.

Which is a shame as a discussion of the fate of bonds and the politics that may make bond investing more risky now than it was in the past actually does apply to retirees living on their investments.

We are already seeing cases of governments willing to sacrifice bondholders although it has not become systemic yet.

 

[veremchuka]

Looks like we're on a porky-laden tangent to me.

IBTL.

 

[obgyn65]

I am also concerned about bonds. Therefore, I will keep buying 10-year CDs.

 

[nun]

I am also concerned about bonds. Therefore, I will keep buying 10-year CDs.

All these low rates on fixed income and fears of falling bond prices make my TIAA-CREF Traditional deferred annuity look better and better. Right now contributions to it get 4.726% and the guaranteed minimum rate is 3%.

 

[obgyn65]

I also bought a couple of deferred annuities last year, with a 12% payout if / when I reach 62.

All these low rates on fixed income and fears of falling bond prices make my TIAA-CREF Traditional deferred annuity look better and better. Right now contributions to it get 4.726% and the guaranteed minimum rate is 3%.

 

[nun]

I also bought a couple of deferred annuities last year, with a 12% payout if / when I reach 62.

That seems very high.......what is the pay out term? I got a pension forecast from TIAA-CREF recently and taking a singe life time income at 55 my payout rate is 7% and I was very pleased with that!!

 

[obgyn65]

I am turning 49 this year, so the payout is much higher. I already posted on this topic a few months ago with all the relevant details, so please feel free to use the search function. Take care.

That seems very high.......what is the pay out term? I got a pension forecast from TIAA-CREF recently and taking a singe life time income at 55 my payout rate is 7% and I was very pleased with that!!

 

[nun]

I am turning 49 this year, so the payout is much higher. I already posted on this topic a few months ago with all the relevant details, so please feel free to use the search function. Take care.

Ahh, I used "SEARCH" and things are a lot clearer now. My 7% payout rate is calculated by dividing my income at 55 by the projected size of my annuity account at 55. Still, I like getting 4.726% interest on money I contribute.

 

[pb4uski]

Ahh, I used "SEARCH" and things are a lot clearer now. My 7% payout rate is calculated by dividing my income at 55 by the projected size of my annuity account at 55. Still, I like getting 4.726% interest on money I contribute.

Obgyn's 12% payout rate is probably the monthly benefit at 62 in relation to the deposit at age 49, so it includes 13 years of growth of the initial premium deposit whereas Nun's 7% payout is actually slightly better assuming that 4.726% crediting rate holds as $100 would grow to be $182 in 13 years and result in a $12.76 payout.

 

[brewer12345]

I am also concerned about bonds. Therefore, I will keep buying 10-year CDs.

Do you understand that the brokered CDs you are buying will get clobbered right along side of bonds in a rate spike?

 

[steelyman]

Do you understand that the brokered CDs you are buying will get clobbered right along side of bonds in a rate spike?

Give it up. Brew me a beer instead!

 

[RetireAge50]

CD's are bonds + insurance combined. No thanks, I think I will invest my money elsewhere.

 

[Fermion]

CD's are bonds + insurance combined. No thanks, I think I will invest my money elsewhere.

Not really. They are redeemable (the non-brokered ones) and as such are closer to cash.

 

[RetireAge50]

Maybe technically it is cash but in my mind if you lend money to the bank you have a bond. Then the bank gives you a guarantee which is insurance.

Maybe it is worth it to feel secure but I can't get my brain around it to give so much money away.

Maybe I'll feel different some day.

 

[haha]

CD's are bonds + insurance combined. No thanks, I think I will invest my money elsewhere.

We sure have some highly individualistic ways of defining ordinary things.

Ha

 

[obgyn65]

I do. As mentioned many times before, it's a risk I am willing to take.

Do you understand that the brokered CDs you are buying will get clobbered right along side of bonds in a rate spike?

 

[brewer12345]

I do. As mentioned many times before, it's a risk I am willing to take.

So how is it different than buying bonds?

 

[obgyn65]

Brewer - as mentioned in the past, I like the predictability of CD income. This, in my opinion, is what I like most about CDs : no surprise. Can't say the same about bonds or bond funds.

So how is it different than buying bonds?

 

[robnplunder]

With equity being all time high, if I worry about bond, I might as well extend my OMY to FiveMY . But I am hoping that things will work out over time (20 - 30 years), especially, by keeping to well diversified AA (Equity, Bond, Real Estate - my house, cash, gold, lottery tickets, ...) .