301–310 of 356 posts
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There is literally a trillion dollars too much in cash in banks right now. All of that money just sits in reverse-repo with the Fed. So I don’t know how you’re claiming that banks aren’t sitting on too much cash?
Closer to $1.7 trillion last I checked. “Money” is inventory for a bank. You can have too much inventory.
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For anyone who filed a 4868, and expects a refund, note that up to $5000 of it can be claimed in the form of paper I-bonds. This limit is independent of the $10000 online bond limit. There is a nuisance factor in that some portion will be delivered in small denominations -- down to $50. If you're using TurboTax, the necessary checkbox is well hidden. Look for a "more options" tab or some such, IIRC.
This seems like oddly-timed tax advice -- the filing deadline (without extensions) was Apr 18 and today is Apr 23.
A 4868 is a request for an extension. So those people still have time.
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doubling after 20 years is approx. 5% growth per year (locked in). It's not that great an investment, but it does make sense to use it as a portion of your portfolio for retirement. I would imagine you'd put around 5-10% of your total networth in this form - may be even stagger it over time (e.g., put in 1% every year starting from 40). This can exist in lieu of bonds in your portfolio - though i would perhaps split…
more like 3.6% with compounding interest…
>>> 2**(1/20.)
1.0352649238413776Earlier quoted context omitted.
Based on the market a lot of people believe “buy some real estate” is the solution. But that bubble IMHO is about to pop. Maybe look into interest protected bonds? https://www.treasurydirect.gov/indiv/products/prod_ibonds_gl... Personally I have been just spending what I make assuming saving is moot right now (besides 401k and espp)
> Based on the market a lot of people believe “buy some real estate” is the solution. But that bubble IMHO is about to pop. I fear we're gonna move to an Australian-style real estate market. Never-ending boom, impossibly high prices for first-time buyers. People have predicted its collapse for 40 years or so, to no avail.
you can only tell a bubble after it pops.
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I had this debate last night. Where i'm undecided is if this works when a housing market is propped up by cash. Eg both houses and land purchases (something i'm trying to do) are quite a difficult market due to cash offers being consistently present. Ie a new family won't have 500k in cash and their loan offer isn't as good as a cash offer. It happened to me several times when i was buying my home ~6 years ago, 250k…
Well, what happened in 2008? Stocks down 50%, housing down 30%. Buying housing was a better investment than stocks. But as both were down, simply holding cash was better. But that's only because the wealthy were hedging against a hyper-inflation scenario, and that scenario didn't occur. In fact you can see this hedging as a reason for the inflation in the first place. Even things like target date funds that need to h…
Inflation can only be produced if the demands for goods and services cannot be met and the price rises as a result.
Asset price increases are not inflation. A house's price going up is not inflation. Rent going up is. A house's rent is only indirectly related to the price of the house - there's a lot more that directly affect rents such as population growth or movement of people, changing preferences (some people might used to have house mates, but now prefer to live alone due to covid etc).
After one year, I-bonds are pretty similar to savings accounts and they are indexed to inflation. Your money won't grow, but it won't shrink either -- and as Treasury bonds they are the lowest-risk investment that exists. If you buy some today, they will pay 7.12% for the next 6 months. After that they will probably be adjusted to pay even more, based on the current inflation rate. There are two major catches: you ha…
Earlier quoted context omitted.
I had this debate last night. Where i'm undecided is if this works when a housing market is propped up by cash. Eg both houses and land purchases (something i'm trying to do) are quite a difficult market due to cash offers being consistently present. Ie a new family won't have 500k in cash and their loan offer isn't as good as a cash offer. It happened to me several times when i was buying my home ~6 years ago, 250k…
People have a lot of home equity because of prices taking off. I expect most of the cash in these offers is from equity in the buyer’s previous homes. It only takes little money injected from outside the real estate system to cause a bunch of these transactions between incumbent owners. Houses are thought to be worth X. One house is available and one labor-rich renter buys it for 2X. This is now the market price of a…
at 2x the price, you'd imagine supply would grow to meet the demand. And yet, something (that i do not know) is causing the supply to not grow as expected.
Earlier quoted context omitted.
doubling after 20 years is approx. 5% growth per year (locked in). It's not that great an investment, but it does make sense to use it as a portion of your portfolio for retirement. I would imagine you'd put around 5-10% of your total networth in this form - may be even stagger it over time (e.g., put in 1% every year starting from 40). This can exist in lieu of bonds in your portfolio - though i would perhaps split…
more like 3.6% with compounding interest…
Real interest rates are still negative, with inflation being at 9%. So even if the yield is 3%, on the 5 year treasury, the real yield is -6%. What fool would lend someone 100 dollars to get back 94 dollars in 5 years? The biggest sucker is the person who owns a 30 year treasury, and if the Fed starts selling its treasuries, good luck getting a reasonable price for it.
The obvious problem is that there is nowhere to hide. All markets are overvalued by virtually any historical metric. At least if you take the -6% real hit, at least you can know and predict what the hit is.