3 ms·

You know exactly what I meant. 1% does not even cover inflation loses and you still took a risk. This is total nonsense and has nothing to do with the initial c

• nybble41 6y ago
  If what you meant is that interest is fully accounted for by the lender taking the risk that the borrower will default on the loan then what you are saying is nonsense. While yields over the past year have been rather low at about 2% due to some very unusual circumstances, and T-bill rates are essentially negative at a mere 0.17% nominal yield, US corporate AAA bonds have a long-term average effective yield of over 4%[0] with essentially no chance of default. This is considerably higher than inflation and nearly risk-free to the investor. These corporations could instead have saved up the amount of the payments and had that money at the end of the bond period, but they wanted the money now rather than later, and that is why they're paying you interest. [0] https://ycharts.com/indicators/us_coporate_aaa_effective_yield https://ycharts.com/indicators/us_coporate_aaa_effective_yie...