How can I make even a measly 3% interest with a guaranteed investment?

[Max2]

Could have passed it with flying colors. My derivatives courses had test questions taken straight from the exam. Yes, I made A's. Why does a US bond pay more than a CD and is more flexible? If rates rise you can stay with both but if rates decline you are still stuck in the CD unless you pay a penalty. With a bond you can cash out at a premium. Ask your favorite banker. You'll probably find him on the golf course.

US Treasuries don't pay more than Bank CD's. Its actually considered the safest, yet weakest return you can get. .43% for two years

2-Year 0.25 2016-02-29 99-21¼ / 0.43 +0.02 / -1 03/25/2014 10-Year 2.75 2024-02-15 100-00½ / 2.75 -0.17 / +2 03/25/2014 30-Year 3.63 2044-02-15 100-19½ / 3.59 -0.55 / +3 03/25/2014

[oldtimer]

As I posted before, safe at what price? There is a liquidity premium. What is better or safer to you? Pure liquidity or waiting for an insurance check plus a lock in? Banks are not your friend.

[oldtimer]

The OP said he could get 1.5 for a five year cd. I'm seeing a 1.75 yield on a five year t bond.

Some institutions are paying higher. By definition though paying higher means more risk, even if it is slight.

Edited March 26, 2014 by oldtimer

[oldtimer]

Even a tips at 1.4 gives inflation protection versus a 1.5 cd.

[oldtimer]

But of course I am not selling anything to anyone here. Ignore this non salesman.

[Ski Bum]

If this is how the powers that be are gaming the system (by making equities the only game in town), it's either play along or sit on the sidelines and watch your spending power diminish over time. Invest what you're comfortable taking a small risk with in top notch mutual funds (look into POAGX, VGHCX for a start). Prudent fund investing is not exactly gambling.

[mustang guy]

Did anybody mention municipal bonds yet? Here is a list of Alabama Munis:

http://alabama.municipalbonds.com/bonds/recent/

Interest earned is federal tax exempt, and sometimes state and locally tax exempt, so the effective rate is much higher than a taxable interest. You are guaranteed your principal if you keep the bonds until maturity. Here is a government website I googled that may help digest it all: https://www.investor.gov/investing-basics/investment-products/municipal-bonds

[oldtimer]

Guaranteed unless the municipality goes bankrupt. We know of course that doesn't happen....

[oldtimer]

Again going back to the original post. There is only one flight to safety. After that, it all depends on what you accept as enough of a guarantee.

[Boxx]

There is only one flight to safety.

Putting it all under the mattress?

[ZAKO]

You play stocks..you might as well go to Las Vegus

[wheelman]

There is only one flight to safety.

Putting it all under the mattress?

A fire proof one.

[mustang guy]

There is only one flight to safety.

Putting it all under the mattress?

Monetary units like the dollar can devalue. FDIC insurance can go bankrupt. Real estate can go down the same as equities.

A hedge against devaluing monetary units is the tried and true gold. It is not a sound investment, but if the world goes to hell in a hand-basket, gold will trade for anything and everything. The value of gold does go up when global economic certainty goes down.

In all my years, I have never lost money on a municipal bond.

[Boxx]

A hedge against devaluing monetary units is the tried and true gold.

I would like to get involved with gold, but it seems that William Devane has cornered the market.... lol..

[RT FAN]

The US Treasury 10 year note is yielding 2.70% as of today. The question is, would YOU lend someone money for ten years @ 2.70%? Because that is exactly what you are doing. By the way, the borrower is currently 17 Trillion in debt & to pay you back they will have to debase the currency, more so than has already been done, to pay you back in dollars that will be worth less than they are today.

What the Fed & Chairman Yellen said the other day was that they will continue to "Taper" the Quantataive Easing program of monthly bond purchases, which had been as high as 85 billion a month, and plan to end the program in the early fall. Who then will step in to buy the massive debt issuance of the US government? We issue hundreds of billions of bills, Notes & Bonds every month to service our outstanding debt & run the government. If you knew that the largest end buyer of US treasuries, (the FED), has tapered their buying program, wouldn't you wait and force the treasury to pay a higher stated rate of interest, (the coupon on a note or bond) before buying? Since 9/11, coupled with the implosion of Bear Stearns, Lehman brothers & the collapse of the US housing market, we have been in an artificially depressed interst rate enviroment, engineered by the FED to recapitalize the banking sector. The FED now has a massive balance sheet nearing $4 trillion in holdings, this situation cannot last forever, Eventually they will attempt to let some of the air out of this bond bubble by allowing rates to rise by either raising the Fed Funds rate or selling some of their holdings. The general consensus is that starting this fall rates will start to rise and there exists the potential for inflation which traditionally leads to higher long term rates. Lock in your mortgage rate, get out of any floating rate debt you have and keep your powder dry to take advantage of higher yields in the future.

[oldtimer]

There won't be inflation until the velocity variable in Friedman's equation gets larger.

[captmobley]

I have all my money tied up in D bills.

D light bill

D phone bill

D rent bill...

[mustang guy]

One investment I truly enjoy is collectible cars. There is no guaranteed 3% return as you put it, but I can tell you this. It's a whole hell of a lot better to polish a car than to log into Fidelity to look at holdings. If you buy a car right, you reduce your chances of taking a dive on it. Remember that! Shop around for what you want, but don't buy it unless you can get the price that is fair. Negotiation is the most profitable exercise you can learn in life. How else can an ordinary man make hundreds or even thousands in minutes? Negotiation!

I can spend $25,000 on a vintage car, and expect that worst case I will break even or have to hold on to it for a couple extra years to break even. If I buy a new car I KNOW I will lose money. If you are worried about safety, buy a cool restomod that has some modern updates. I have seen people who have taken newer model rolling chassis and stuck vintage Mustang or Camaro bodies on them. Yes, you could sell that just like you could an old car. In fact maybe easier.

I also like investing in real estate. That is where most of my investments are in fact. I like income producers. Once again, I buy right. The last property I bought had comps at $120-130K. I bought this for $73,500, and the seller paid $500 of the closing costs. The comps were exact because they are condominiums in the same building at the same ski resort. I bought this right by asking the Realtor if there were any deals. Unfortunately the seller was going through a divorce and had to liquidate quickly. He was asking $75K with him paying $500 closing costs, and I got him down a bit more. Since I bought the place in October, my family has been there a dozen times. Well worth the investment!

I can easily get my money out of the place if need be; however, I expect I can turn a healthy profit if I ever sell.

Edited March 27, 2014 by mustang guy

[mustang guy]

Here is a DIY for that index. http://www.hagerty.com/valuationtools/market-trends

I shop Loopnet for real estate. I invest in mostly commercial income producing property.

[eth2]

Public Utilities (electric &gas) are generally considered "safe" especially non-nuclear utilities. They generally pay good dividends and are less subject to price fluctuations...unless someone figures out how to generate power through fusion.