Series I Bonds, Yes 9.62%

From the Archives of TGIF 2 Minutes (original post May 13, 2022) to reflect my recent purchase of I-Bonds and continued questions received:

“What are I Bonds?” The “I” in I Bonds stands for Inflation, which is why these bonds are so HOT at the moment. (Note: inflation overall is clearly not a good thing; I Bond interest rates may be one of the only things that benefit from skyrocketing inflation.)

You can skip this entire post and simply go to www.TreasuryDirect.gov and click on “How to buy Series I” under the column, “Individuals”. The website is written – literally – as if a third grader could understand it. See the * and ** footnotes below.

The “I Bond phenomenon” has heated up in the past eighteen months with the spike in inflation. Their current, high interest rate warrants taking a look.

Continue reading “Series I Bonds, Yes 9.62%”

Hard Landing Recession or Soft Landing?

It is fairly safe to say that the US has entered a recession, even if the backwards looking, narrowly focused, official “National Bureau of Economics Research”, or NBER, has not declared it yet. The NBER is a private, non-profit organization founded in 1920 that somehow came to possess the distinct “responsibility” of declaring recessions in the US. Seriously?

In the case that the US has entered a recession (not yet “declared” by the NBER) then what does that mean for savers and investors? A quick bit of background: typically, economic cool-downs come in two varieties: hard landings and soft landings.

  • The hard landing ends a period of economic expansion in recession,
  • The soft landing ends a period of expansion with a smoother period of mere economic slow-down.

Continue reading “Hard Landing Recession or Soft Landing?”

What’s Important NOW?

Lately it seems that reaching Friday is a goal in itself. In markets like these it is not easy to “keep calm and carry on” as if there is nothing different going on. There are, in fact, multiple very different things going on. The coming weeks and months may bring even more different events and uneasiness – with a bit of good mixed in.

So, then the question becomes, What is important NOW? It may be tempting to answer:

  • Federal Reserve policy on interest rates
  • the coming November elections
  • mortgage rates
  • the level of inflation
  • energy prices
  • the US and world economies.
Photo by Kathy Jones on Pexels.com

Continue reading “What’s Important NOW?”

The Psychology of Interest Rates

Dedicated readers of TGIF 2 Minutes will recall highlights two weeks ago of Morgan Housel’s excellent book, The Psychology of Money. Digging deeper into the book revealed the theme that human nature and psychology most often lead people to hear – and believe – only what they want to hear and believe or see happen.

This statement is not an insult or meant to sound arrogant. Rather, in matters of money, financial markets and even the economy there is evidence that people, the more they want something to be true, most often will believe a story that overestimates the odds of the story being true.* The markets, following recent comments by Fed Chairman Jerome Powell, nudged UP on thoughts the Fed might “pivot” (meaning: possibly slow the pace of interest rate increases and even lower interest rates next year – a wishful “story”). But more recent moves down in markets reflect the less popular belief that the US Federal Reserve likely will NOT reverse course, thus continuing to raise interest rates until inflation shows evidence of cooling. 

Continue reading “The Psychology of Interest Rates”

A Little Paranoia Is a Good Thing

Record-breaking, big outlier events tend to move the needle the most in the economy and stock market.* Note the word, “outlier.” Outlier events typically are surprises and are indeed unlikely. In his beyond excellent book The Psychology of Money author Morgan Housel lists five events that were outliers with world-changing consequences:

  • The Great Depression
  • World War II 
  • The dot-com bubble
  • September 11th
  • The housing crash of the mid-2000’s.

A conclusion could be drawn from the book’s chapter titled, “Surprise!” that surprises are perhaps the most reliable thing going. But the irony of the reliability of surprises is we do not know what the surprise is until after it has unfolded.

Making room for error can be as simple as having a having a “Plan B” and “Plan C” – or being OK with starting completely from scratch – if “Plan A” does not work out. 

Continue reading “A Little Paranoia Is a Good Thing”

Murphy’s Law & YOLO Can Be Expensive

One of the most critical factors of long-term personal financial success is… guess:

  • The markets
  • Spending
  • Interest rates
  • Stock selection
  • Income level

And the answer is…. SPENDING. This fact is why a truly competent financial planner will spend the most time on discussing spending, both today and future projected, along with GOALS. (Goals are what people spend money on.)

Holding an amount of cash – un-invested cash savings – is key to surviving Murphy’s Law events.

Continue reading “Murphy’s Law & YOLO Can Be Expensive”

Financial Satisfaction in Crazy Times

These are crazy times, almost chaotic. Chaos is defined as complete disorder and confusion – and parts of the world and our lives may be nearing that point, or at least feel that way. How does an investor get financial satisfaction in times like these? Carefully and patiently.

“Carefully” can equate to:

  • having a plan that addresses saving, spending, taxes, & investments
  • being able to monitor and adjust the plan, perhaps with an adviser
  • then continually executing the plan.

The “patiently” part can be more difficult and is just as critical.

Storms are temporary and the worst of chaos and volatility will pass – be prepared for an unknown timeframe.

Continue reading “Financial Satisfaction in Crazy Times”

Crypto Quarterly (& More) – vol. 2

Today’s TGIF 2 Minutes features:

  • A high-level update & follow-up on cryptocurrencies
  • Brief comments on Inflation & 1st quarter 2022

Crypto Update

Continuing with the whirlwind of interest generated by “To Crypto Or Not To Crypto” and “Crypto Superbowl” there is more to say including highlighting the recent 36% decline in Bitcoin since November 2021. There is broad evidence that high-profile, fiduciary financial advisers are hesitant – for good reason – to include cryptocurrency across the board in client portfolios. At the same time, a good number of high-profile, responsible, fiduciary financial advisers are including cryptocurrency in some – emphasis, “some” – client portfolios, depending on the client’s goals and risk tolerance.**

Continue reading “Crypto Quarterly (& More) – vol. 2”

A Little More on Caring For Mom (or Dad)

A short one today, and “Semper Fi” to a very special group of friends.

Last week’s edition of TGIF 2 Minutes titled, “Alexa, Remind Mom to…” led to a number of real-life responses and more resources regarding finding care for a parent or loved one. So here goes:

  • Good morning. FYI, I had a terrible experience with “A Place for Mom.” It was an aggressive marketing machine and I felt like I was buying a time share.

Continue reading “A Little More on Caring For Mom (or Dad)”

War, Invasion & Investing

Clearly, war and invasions have far more repercussions than merely financial. But somewhat luckily, the financial toll in most cases, for us as Americans (exception September 11th), has been what hits closest to home. And unluckily financially speaking, the biggest savers and investors are then most affected by the financial toll of war and invasions around the world.

Currently, the world – most notably the Ukraine, Eastern Europe and Russia – is experiencing the effects of an invasion that (God help us) may or may not turn into a larger situation. Specifically, the financial effects of the Ukraine invasion by Russia are being felt far beyond Europe and Russia. US and worldwide stock markets are down both from late 2021 highs and most notably in late February.

World events over the past 50+ years, and the accompanying market reactions that took place over the short-term and longer-term.

Continue reading “War, Invasion & Investing”