4 ms·
7% is likely a negative real rate at the moment.
by anm89 5y ago
7% is likely a negative real rate at the moment.
- joelbluminator 5y agoMight do better than the market in 5-10 years though...
- anm89 5y agoI don't disagree but it's still worth noting
- sethammons 5y agoback when I worked as an investment advisor, I met a lady who had a 30 year $250k CD with a fixed 15% (maybe higher). That was a solid investment!
- anm89 5y agoYeah that is one of the cases where the older generation really did have it way easier. Imagine having access to 15% CDs. I know 20% was out there too.
- mdorazio 5y agoThe flip side is that they were buying these things when other interest rates were also correspondingly high due to inflation, so they got hosed in other ways (think mortgages).
- newacct583 5y agoCite for that? No one with any expertise has predicted a >7% inflation level that I'm aware of. This sounds like something you got from talk radio. (Edit: two replies have taken this out of context. Savings bonds have a minimum term of five years (well, without penalty). For them to have a negative yield, we need to see aggregate inflation >7.12% over the next five years. That's nuts, sorry. No one is predicting that.)
- mhmmmmmm 5y agoThis particular Bond yields current inflation levels: "How is the interest rate of an I bond determined? The interest rate combines two separate rates: A fixed rate of return, which remains the same throughout the life of the I bond. A variable semiannual inflation rate based on changes in the Consumer Price Index for all Urban Consumers (CPI-U). The Bureau of the Fiscal Service announces the rates each May and November. The semiannual inflation rate announced in May is the change between the CPI-U figures from the preceding September and March; the inflation rate announced in November is the change between the CPI-U figures from the preceding March and September." So its fairly safe to assume that current inflation levels are indeed 7%.
- anm89 5y agoTelling that your comment is starting to gray out but I have a degree in economics and I don't listen to talk radio Housing inflation has averaged 14% to start. https://www.reuters.com/world/us/runaway-us-home-price-rises-slow-affordability-worsen-2021-08-27/ https://www.reuters.com/world/us/runaway-us-home-price-rises...
- newacct583 5y agoGreat, then surely you can cite me the source you used to predict that general inflation (not, ahem, some cherry picked real estate numbers) would be higher than 7% over the life of this bond, producing the negative interest you were teasing?
- aeternum 5y agoNY Fed is predicting near/over 7% in many categories: https://www.newyorkfed.org/microeconomics/sce#/commodexp-1 https://www.newyorkfed.org/microeconomics/sce#/commodexp-1
- anm89 5y agoRight, calling this some kind of talk radio conspiracy theory is completely ignorant. Go to the analysts at any major bank and see what they've got in their models. Or better yet, as you mentioned, go to the fed itself. And you KNOW, the fed is understating, not overstating those numbers.
- mhb 5y agoIs it more negative than the 0.1% that a savings account is paying?
- fragsworth 5y agoNo, but it's likely to return less than hoarding actual things/products.
- beervirus 5y agoLand, maybe. Hoarding toilet paper and beanie babies probably won’t get you great returns.
- Goety 5y agoWe're so fucked arn't we?