Yield is Back. But It’s Tricky.
It’s Time to Earn Some Income. But the Math is Trickier Than You Might Realize.
In this blog, you’ll learn:
I was recently asked to give a 2nd opinion on someone’s managed IRA (Individual Retirement Account). This person had dumped all of his stocks during the pandemic in March of 2020 (and missed the 27% gains of 2021). His financial advisor had him “safe.“ That meant that he was all-in on very low-yielding Treasury Bills and a money market fund. Consequently, this person’s “safe” portfolio lost money. When new issuances were offering a lot better interest rate and ROI (Return on Investment), the value of his existing Treasury bills went down. He will now have to hold them to term before getting his money back (while missing out on the returns that others enjoy).
In 2022, after years of not earning anything on the safe side (most bonds have been negative yielding), we finally have the opportunity to earn some income. However, it’s important to keep:
Navigating between the areas of opportunity, while avoiding the massive amount of debt, credit risk, duration risk, opportunity costs, illiquidity and other perilous problems of our leveraged Debt World, is tricky. That is why we spend one full day on what’s safe at our Investor Educational Retreat. That is also why it’s important for you to be the boss of your money, and not just have blind faith that someone else is protecting your future for you.
Below are a few ways to start earning some income. However, again, it’s not a good idea to put all of your liquidity into any of these things. Better opportunities are on the horizon, and you want to have the cash on hand to take advantage of them.
Treasury I Savings Bond.
The yield of the Treasury I Savings Bond is linked to inflation and is paying 9.62% for the next six months. The interest rate will be reset again on November 1, 2022. Since inflation is still high, the reset is expected to be a very good interest rate. Once reset, the rate is locked in for another six months, through May 1, 2023. There are conditions to the Treasury I Savings Bond. It’s important for you to read the fine print. I discuss this more in my free videoconference. (Click to access.)
2-Year Treasury Bill.
Currently, the 2-year Treasury bill is paying a greater interest-rate than any other term. The yield curve is inverted. The 30-year T-bill pays only 3.73%, while the 2-year is earning 4.12%. Since the yield on the 2-year Treasury could be much higher in early 2023 than it is right now, it’s a good idea to keep some cash on the sidelines.
A lot of people are interested in REITs for the high yield. It’s important to remember the difference between empty office buildings (probably not worth the high risk) and apartment REITs that are enjoying the out-of-control shelter inflation of rent. (This is bad, of course, for Main Street, but good, sadly, for Wall Street.)
However, there’s another way to get a good yield – while also increasing your diversification. Some countries are offering high-yield. So you might look at Australia and Peru, which are offering 8% and 7% respectively on their iShares exchange-traded funds. Since these are funds, and are invested in publicly traded companies (stocks) in those countries, they go on the “at-risk” side of your portfolio.
There are many other nest egg basics to learn, including proper diversification and regular rebalancing. We spend a day on nest egg strategies at the Investor Educational Retreat. Once you learn the life math that we all should have received in high school, you can protect your future, earn money while you sleep, save thousands annually in your budget and live a richer life – all with less time and money than you currently spend.
Rising interest rates are finally presenting an opportunity for fixed-income investors to get paid. There is still a great amount of risk, and the returns are still pretty low. So maintaining liquidity, while also getting diversified, is going to be important. The first step in all of this is understanding the life math that we all should’ve received in high school. So I encourage you to watch the videoconference on yield that I hosted earlier this month, as well as attend our January 20-22, 2023 Investor Educational Retreat.
If you're interested in learning 21st Century time-proven investing strategies for protecting your wealth and managing the bear market from a No. 1 stock picker, join us for our Jan. 20-22, 2023 Financial Freedom Retreat. Email info@NataliePace.com to learn more and to register. Click on the banner ad below to discover the 18+ strategies you'll learn and master, to get pricing information and to read testimonials Get the best price and a complimentary private prosperity coaching session (value $300) when you register by Halloween, Oct. 31, 2022 Register now to access your free 4-part Protect Your Wealth Now webinar that will get you started immediately.
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Natalie Wynne Pace is an Advocate for Sustainability, Financial Literacy & Women's Empowerment. Natalie is the bestselling author of The Power of 8 Billion: It's Up to Us and is the co-creator of the Earth Gratitude Project. She has been ranked as a No. 1 stock picker, above over 835 A-list pundits, by an independent tracking agency (TipsTraders). Her book The ABCs of Money remained at or near the #1 Investing Basics e-book on Amazon for over 3 years (in its vertical), with over 120,000 downloads and a mean 5-star ranking. The 5th edition of The ABCs of Money was released on September 17, 2021.
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Please note: Natalie Pace does not act or operate like a broker. She reports on financial news, and is one of the most trusted sources of financial literacy, education and forensic analysis in the world. Natalie Pace educates and informs individual investors to give investors a competitive edge in their personal decision-making. Any publicly traded companies or funds mentioned by Natalie Pace are not intended to be buy or sell recommendations.
ALWAYS do your research and consult an experienced, reputable financial professional before buying or selling any security, and consider your long-term goals and strategies. Investors should NOT be all in on any asset class or individual stocks. Your retirement plan should reflect a diversified strategy, which has been designed with the assistance of a financial professional who is familiar with your goals, risk tolerance, tax needs and more. The "trading" portion of your portfolio should be a very small part of your investment strategy, and the amount of money you invest into individual companies should never be greater than your experience, wisdom, knowledge and patience.
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Natalie Pace is the co-creator of the Earth Gratitude Project and the author of The Power of 8 Billion: It's Up to Us, The ABCs of Money, The ABCs of Money for College, The Gratitude Game and Put Your Money Where Your Heart Is. She is a repeat guest & speaker on national news shows and stages. She has been ranked the No. 1 stock picker, above over 830 A-list pundits, by an independent tracking agency, and has been saving homes and nest eggs since 1999.