Good day one and all!
I hope the beautiful fall weather I am having is yours too!
Recently I got in a slight argument with a friend over how to invest money in this crazy market. He insists that with cunning and savvy you should buy stocks now while they are low and sell high.
My problem with that is the market is on a wild roller coaster....up 900 points down 700 points, up down. Not for me.
Then a more mature, smarter person told me bonds are the way to go. They are long term, pay out interest annually and when they mature you get the full value.
So I looked into it and found this web site:
http://www.savingsbonds.gov/indiv/research/indepth/tbonds/res_tbond_rates.htm
It has tons of great info and is not that difficult to understand. And the interest rate is higher than anything I have seen right now....3.9% to 4.5%!
I will take that over stocks right now...but that's me.
Check out this info from the web site:
Treasury Bonds In Depth
Treasury bonds are issued in terms of 30 years and pay interest every six months until they mature. When a Treasury bond matures, you are paid its face value.
The price and yield of a Treasury bond are determined at auction. The price may be greater than, less than, or equal to the face value of the bond. For more on the price of a Treasury bond, see Treasury Bonds: Rates and Terms.Treasury bonds are sold in TreasuryDirect (but not in Legacy Treasury Direct) and by banks, brokers, and dealers.
NOTE: At this time, only individuals can hold accounts in TreasuryDirect.Two types of bids are accepted:
With a noncompetitive bid, you agree to accept the interest rate determined at auction. With this bid, you are guaranteed to receive the bond you want, and in the full amount you want.
With a competitive bid, you specify the yield you are willing to accept. Your bid may be: 1) accepted in the full amount you want if your bid is equal to or less than the yield determined at auction, 2) accepted in less than the full amount you want if your bid is equal to the high yield, or 3) rejected if the yield you specify is higher than the yield set at auction.
To place a noncompetitive bid, you may use TreasuryDirect, or a bank, broker, or dealer.
To place a competitive bid, you must use a bank, broker, or dealer.
Bonds exist in either of two formats: as paper certificates (these are older bonds) or as electronic entries in accounts.
Doesn't sound to difficult does it? AND you can buy a bond for as little as $100!!! WOO HOO!!!
I hope this helps some of you who are wondering how to save some long term money. I know I will be buying some bonds.
Have a great day!!
Mandi G.
Money correspondent
gather.com
recommend this
email
print
link to this page
Comments: 23
i have $100 in bonds to date. love this site!
im not trying to get a referal or anything...i dont think they even do that. but check it out if your interested in savings bonds
Ryan you should post an article about that site!!! great info! I will check it out!
thanks everyone!!
Think about it this way - the market was at 14,000 about a year ago. Now as I type this, it's only a little over 9,000. While I think it's fair to say that 14,000 overvalued the market a little, I think it's equally safe to say that there's no WAY the underlying companies are really only about 2/3 as good investments as they were. Now certainly, you want to stay away from certain stocks, whose companies are in trouble from the financial crisis. But for the large part, if you buy now, you're essentially buying stock "on sale".
The whole trick of buying stock is "buy low, sell high". Well, they never get low in GOOD times...stocks dive when people panic. When rationality returns to the market, and it will, it always does, people will see what value there is to be had, and the market will drive stocks back up.
Bottom line, if you're 65 and need the money to live on right now, absolutely, your portfolio should be very light on stocks right now. But if you're 35, your friend is right. Buy low, sell high.
Now, at the same time, what you're saying about bonds is true as well. Bonds are a very safe, sound investment. Government bonds doubly so. Also, if you're in a high tax bracket, you might want to look at municipal bonds (bonds sold by states, towns, counties, etc, for various government projects). The interest income on those bonds is free from federal taxes.
Also, the government isn't the only player in town when it comes to bonds. Corporate bonds often perform better in terms of return, and bonds from big high quality companies are about as safe as government bonds too... a bond from a company like Microsoft would still be a relatively safe investment, but offer a better return than a government bond.
A sound investment strategy has a long term mindset, and is balanced and diversified. That means it includes stocks, bonds, money market funds, mutual funds, and CD's. The actual ratios depend on your life stage, your risk tolerance, and other factors. A Financial Advisor would be very helpful in determining a sensible balance for you.
I just wanted to stop by since I am finally going through what is now listed as under 4,700 pieces of gather new mail that is sitting in my inbox on here.
With that mentioned I just came across either a mailing from you yourself, or someone else brought this piece to my attention. You or they felt that your creation should be shared with the gather community, which I am very glad that it was passed on to me to view. So I wanted to say Thank you for taking the time out of your busy day to publish it here on gather for us to all view. :o)
As well before I leave you I wanted to wish you a Happy New Year... in 2009 :o)