bostonbubble.com

[GenXer]

You know what I keep telling my clients? If inflation hits 20% again as it did in the early 80s, it will be a brief window of opportunity to become very rich. All you have to do is buy a 30-year treasury bond yielding 15%. But you need at least several $100k for that. You do that, and you have yourself a nice pension. Treasuries are also call protected. The only thing is you will really need to catch the top (not very easy to do), but once you are in the 10% ballpark, it does help to start buying up a ladder. Unless we are really screwed, inflation will be lower eventually, but your yield will remain the same regardless.

This is called opportunity cost. And many people who complain about not having $100k in the bank are doing what? Putting that $100k that can be their winning lottery ticket into a 529 plan for a guaranteed loss on an inflated college education that is in most cases. We all know interest rates are going up, and maybe up quite a lot. It is a small risk to keep a large cash reserve instead of wasting the money on houses/529 plans, but the upside can be huge (with no downside at all, since all you have to do is keep the cash in an easily redeemable CDs).

[BK]

Genxer,

Are you advising any of your clients to short Treasuries with TBT (etf)-
it seems that the Federal Reserve will try to keep interest rates lower for as long as possible - too long.
The challenge will be to Not be greedy and exit TBT or similar Treasury shorting mechanism - before the Fed is forced to raise interest rate substantially to attract foreign investors-

What are your thoughts ??

[Boston ITer]

[GenXer]

[balor123]

[GenXer]