Smartie's Bar & Grill #71

You can't study dividend stocks too much. Good ones are probably the safest investments, but they are not risk free
Bonds and annuities are now, IMO, very risky - I won't touch them.

 

Is there still the 10% penalty for early withdrawal.?

 

Yes; with some exceptions.

 

Got the siding on the east side of the house and the scaffolding is down. The scaffold was made of 2x4 s and 2x6 walkboards. It was put together with T25 star head screws. Now that I have survived I can talk about it. The 2 by stuff can be reused. I made as few cuts as possible. Most are still 8 ft. long. I can also reuse the screws. They cost more than nails but they are easy to use and they make a tight joint. The wood doesn't bounce around like using hammer and nails.Just back them out and put them up for later . The solar porch light is also up and running. It has a motion detector.

 

I'm thinking about getting some of this, and waiting for the next interest rate scare.

http://bigcharts.marketwatch.com/quickchart/quickchart.asp?symb=TTT

 

Happy pi day!



https://www.tasteofhome.com/recipes/grandma-s-chocolate-meringue-pie/

 

Would work if there is not another wave of inflation.

 

The fund works in line with interest rates. If rates go up, and bondholders are getting killed, the fund's price goes up.

 

How fast can it adjust?
Inflation can go up like as rocket

 

Pretty much in real time. Interest rates and bond prices change from second to second.
This fund only has about $50million in assets, so it doesn't trade every second.

"The Market" predicts what its value should be, with each trade. So, there is some inefficiency. The fund itself, buys and sells securities as needed once a day, in order to keep the value of its assets in line with their goal of tracking opposite to bond prices.

 

When the start of 401k programs came about I went across the street
to the bank.My Old man owned a restaurant and I was the Manager.
My old man was a fuddy-duddy.I couldn't get him to try those 401k
for the employees.Lordy knows I tried.I sat in that Bank with the bank
Mngr. and fielded questions about 401k's and my old man seemed
disinterested.My father was dead set against it.He also was against
setting up Health Insurance for his employees.
My old man died rich but had a horrible end to his life.
That is what getting rich,too easy can do to a human.

 

The 401k is the best invention ever come up with for workers; especially when employers contribute. They're giving away free money.

 

Yes,401k are about the best invention for employees to ever
come about.But there is a downside.Like in 2008 and the Market Crash.
But if one hangs in there,stocks work themselves out.
However it took too long for the market correction after 2008.
But the market did come roaring back.It took a good 4-5 years.
Yet,another downside is the total reversal of CD's.They used to be
a solid Investment.They never came back.Plus Treasury Bills { which
need a broker to buy for you } are also way too low.
Zero coupon bonds get bought up very quickly,when available.
There was a time just a few years ago when Cash was King.
Not in a Savings acct.But just holding on to your hard cash.
A lot of Billionaires were stockpiling hard cash.This is when Europe
was trying out Negative Interest rates.As in,getting charged by the bank
for keeping your money in an account.

 

Not to give you a hard time, but contributions to programs like a 401k are really your wages, just paid differently. If you are good with that thought, then no problem, but personally, I prefer my wages in my grubby little hands, taxes paid and mine to do with as I see fit.

 

401K's are an investment vehicle.Over and above a job or good job
and salary.The best Investment one will ever have is a Good Job and
Good salary.However there is a catch.401K's are only available to
a person with a bona-fide job and salary.How much the average 401k's
contributes out of one's wages is somewhat relative.401K's are
Not tax-free but tax-deferred.

 

What happens to the value of a 20 year note as inflation rises to even a moderate 20%?

 

I am acquainted with 401ks. The portion the company contributes, as TC called it 'free money', could have been part of the wages paid.

Tax deferred.. ad what guarantee do we have what that rate will be? Also, you must adhere to a distribution plan outlined by the government, or you pay penalties. So, someone else is deciding how much you can have, and when.

Nope, thanks, I can do that myself.

 

A friend of mine only buys 2yr CDs. Here about five years ago, he told he got a statement for one of them. On a $100k CD, his interest income for the quarter was $12.50.

 

I don't know how moderate 20% is, but the 20year note would crash and burn.

 

Hmm...

I don't see where stating your opinion could be a problem for me.

 

With a picture being worth a thousand words; here's a chart of the price action of TTT compared to the interest rate on 30year treasuries. You can see the inefficiency in how it tracks.

Black is 30year interest rate. Whatever that other color is, it's the price of TTT.

 

When the Fed gives cheap money to the banks why pay people a decent interest rate. When the prime rate goes up a CD will be a good investment. Like when Carter was president.

 

I can see how this would work well so long as inflation is well controlled. We have not had high inflation since the 70s. It is hard to know how to react to a thing beyond our living memory.

"Economic imbalances engendered political instability. Spain in the reigns of Charles V (1516 – 1556) and Philip II (1556 – 159 was the strongest state in Europe. Like many other great powers, even to our own time, it fell into the fatal habit of deficit spending, and was finally reduced to a fiscal condition that historian J. A. Elliot describes as "chronic bankruptcy." At least six times between 1557 and 1647, the Spanish government went bankrupt, and found itself unable to meet its obligations or to borrow further. These fiscal crises occurred every 20 years with remarkable regularity – 1557, 1575, 1596, 1607, 1627, 1647. Spanish historian Vicens Vives writes: "the vicious cycle was complete: the larger the state's debts became, the harder it was to meet them." Other states were caught in the same cycle. Deficit financing was not invented in the 20th century. And England, France, and Germany, rulers became chronic debtors.

These instabilities were deepened by the effect of war. The two steepest surges of inflation in the 1540s and 1590s were periods of heavy military spending. Here was yet another vicious circle between economic imbalances, political instability, and war." THE GREAT WAVE, Price Revolutions and the Rhythm of History, David Hackett Fischer, Oxford University press, copyright 1996. p. 91.

Fisher provides many accounts of the kind of suffering that results from inflation and inflation generated political instability.

 

Probably before it could be sold.

 

A 7% CD that looked good when Ford was trying to Whip Inflation Now" would be chewed up pretty fast as inflation approached 20%.
My parents never bought CDs after that experience. I have absorbed their bias.