Inflation
Series I savings bonds: A safe investment with a high return
I get a lot of questions about money. These questions tend to vary based on the asker and her needs, but there’s one question I get more often than any other: “What’s a safe investment with a high return?”
For the past decade or so, I’ve had no answer to this question. Savings accounts and certificates of deposit are safe, sure, but they’re no longer attractive investments. Since the Great Recession of 2008/2009, interest rates have remained shockingly low. This is by design. The government doesn’t want you parking your money in a savings account. They want that money out circulating in the economy.
Over the long term, the stock market offers excellent returns. But when people are asking for “safe” investments, they’re wanting avoid short-term volatility, which means stocks are out of the question. (And stuff like Bitcoin and precious metals are even more out of the question!)
Today, however, while catching up on my blog reading, I stumbled upon a link from Michael Kitces’ weekly roundup for financial planners. The story he shared blew my mind. Writing in The Wall Street Journal, Jason Zweig explains the safe, high-return trade hiding in plain sight. (This article is behind a paywall.) That safe, high-return trade? U.S. government Series I savings bonds.
These inflation-adjusted bonds are currently yielding 3.54% annually!
We didn’t start the FIRE: The true history of financial independence
I used to be a collector. I collected trading cards. I collected comic books. I collected pins and stickers and mementos of all sorts. I had boxes of things I’d collected but which essentially served no purpose.
I can’t say I’ve shaken the urge to collect entirely, but I have a much better handle on it than I used to. A few years ago, I sold my comic collection and stopped obsessing over them. Today, I collect three things: patches from the countries I visit, pins from national parks, and — especially — old books about money.
Collecting old money books is fun. For one, it ties to my work. Plus, there’s not a huge demand for money manuals, so there’s not a lot of competition to buy them. (Exception: As much as I’d love a copy of Ben Franklin’s The Way to Wealth, so would a lot of other people. That one is out of my reach.)
One big bonus from collecting old money books is actually reading these books. They’re fascinating. And it’s interesting to trace the development of certain ideas in the world of personal finance.
For instance, there’s this persistent myth of “lost economic virtue”. That is, a lot of people today want to argue that people were better at managing their money in the past. They weren’t. Debt (and poor money skills) has been a persistent problem since well before the United States was founded. It’s not like we, as a society, once had smart money skills and lost them. The way people manage money today is the way they’ve always managed money.
Or there’s the notion of financial independence (and the closely-related topic of early retirement). The standard narrative goes something like this:
- In 1992, Joe Dominguez and Vicki Robin published Your Money or Your Life, and that marks the “discovery” of FIRE.
- In the late 2000s, Jacob from Early Retirement Extreme picked up the FIRE banner, then handed it off to Mr. Money Mustache a few years later.
- Today that banner is being carried by newcomers like Choose FI and the /r/financialindependence subreddit.
When you read old money books, however, you soon realize that FIRE isn’t new. These ideas have been kicking around for a while. Sure, the past decade has seen the systemization and codification of the concepts, but people have been preaching the importance of financial independence for about 150 years. Maybe longer.
Today, using my collection of old money books, let’s take a look at where the notion of financial independence originated.
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The post How Does the Federal Reserve Impact Mortgage Rates? first appeared on Total Mortgage.
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