Your Retirement vs. Low Interest Rates (communities, 2014, relative, retired)
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I think its goig to be interesting just whathappens to investment once interest rates start to rise.Some see the same happening as after the 70's recssion when a whole genratio retil investors left the markets. One only has to look at FED actions and results to see its not driving markets like expected. Add the investment needs of boomers retiring just startign and many thigns can change.
Excellent point. If the government really wants to make an impact raising interest rates for treasury bonds will attract boomer money. That in turn will allow more money to be leant and re-invested into the economy.
Rising rates don't cause inflation they tame inflation.
What will happen to investments when rates rise all depends on the part of the cycle we are in.
Rates rising now would be an indicator unemployment and the economy are doing better. That is a good thing for investments.
We are so far away from high rates trying to tame a hot economy as well as boughts of high inflation as to not be an issue in the near term.
Interest rates in any bond market where Bernanke and Company has fingers in the pot don't mean anything - because they're 100% manipulated by government intervention. Interest rates will move more in these pots in the future based on fed statements and actions than anything having to do with the real economy. Robyn
Excellent point. If the government really wants to make an impact raising interest rates for treasury bonds will attract boomer money. That in turn will allow more money to be leant and re-invested into the economy.
Bernanke and Company doesn't give a flying f*** about "boomer money". It just cares about saving us from the perceived evils of deflation (and the perception - correct or not - that deflation is just around the corner). Robyn
-The fed already said they are holding rates until unemployment and the economy looks better .
So you have the fed working the short end and so far investors around the world holding rates down on the longer end.
The worlds investors already proved they can wrestle the longer term rates away from the fed if they do not see things their way.
The famed inverted yield curve just before the recession was caused by the fed trying to raise short term rates while investors didn't think that was the right course of action.
The end result was short term rates were higher than long term rates.
The fed already said they are holding rates until unemployment and the economy looks better .
So you have the fed working the short end and so far investors around the world holding rates down on the longer end.
The worlds investors already proved they can wrestle the longer term rates away from the fed if they do notxsee things their way.
The famed inverted yield curve just before the recession was caused by the fed trying to raise short term rates while investors didn't think that was the right course of action.
The end result was short term rates were higher than long term rates.
The Fed is also working the long end as well to keep rates down.
Fed Extends Bond Buying Into 2013 - WSJ.com
The Fed said Wednesday, at the conclusion of its last policy meeting of the year, that it would enter 2013 with a plan to purchase $85 billion a month of mortgage-backed securities and Treasury securities, part of a continuing attempt to drive down long-term interest rates to encourage borrowing, spending and investing.
There is really nothing wrong with holding large amounts of cash at near zero rates today if your master plan is to buy some riskier assets later on when an asset class falls.
It is those that have no plan to do that ,who will either have to cut spending expectations or save a whole lot more.
But bad point. Raising rates will make all the debt we owe have crushing interest payments by the gov.
Billions of our tax dollars will just go for debt service with higher rates.
Why or how would that happen? Wouldn't the bonds be sold with a term and wouldn't that put money in banks to lend? As it is already the government printing money is a form of raising our interest payments already?
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