Recommended investments in high interest environments

mandm

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Michael
What’s your recommended areas of investment in higher interest environments?

And what would you avoid in higher interest environments?
 
Anyone still doing consumer P2P lending? That was a gold mine for me like 10-15 years ago.

Seems like fixed income would be acceptable now again, much less convexity risk. Also, Bitcoin?
 
See if I can keep an ongoing list

Positives
Cryptocurrency
P2P
Fixed income / deposits
Waffles (per Ted) :cornut:

Negatives
Real estate
 
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What’s your recommended areas of investment in higher interest environments?

No easy answer to this question. Lots of moving parts, especially tax treament of shifting your investments around and then income. Investment time horizon is a big factor. Then what happens if interest rates suddenly reverse?

Based on previous investing threads here at POA, I'd say go elsewhere for meaningful replies.

I'm personally sticking to my long term plan.

"nobody knows nothing" - Jack Bogle, founder of Vanguard
 
What’s your recommended areas of investment in higher interest environments?

And what would you avoid in higher interest environments?
yes, there are sectors that are not the best short term when interest rates are higher, these are the same sectors that will increase a lot as interest rates fall.
 
I just thought of this. High interest environments bring loads of volatility - might be a good game to short vol in equities/futures via options (if you know what you're doing). I'd be all in that except it's a bit of work unless you're super super small.
 
I just thought of this. High interest environments bring loads of volatility - might be a good game to short vol in equities/futures via options (if you know what you're doing). I'd be all in that except it's a bit of work unless you're super super small.

If you don't know who the chump is in a trade like this, you're the chump. Applies to any speculative trade.

Don't!
 
As someone recently said on a WSJ podcast, “T-bill and chill.”
Hard to argue with that. 5.29 on a 30 day t-bill. TreasuryDirect reinvest, set it and forget it for a few months.
 
Hard to argue with that. 5.29 on a 30 day t-bill. TreasuryDirect reinvest, set it and forget it for a few months.
There are savings accounts at about that rate now. I'm in a money market account with Vanguard that is similar now. If you want quick access to the funds as needed, it has that over a t-bill at least.
 
If you don't know who the chump is in a trade like this, you're the chump. Applies to any speculative trade.

Don't!
I agree. If you don’t know what you’re doing, don’t trade this strategy!
 
There are savings accounts at about that rate now. I'm in a money market account with Vanguard that is similar now. If you want quick access to the funds as needed, it has that over a t-bill at least.
I'd be a little leary of sticking large sums into some of those high-yielding internet banks. Yeah, they're FDIC insured. But, if they do run into a liquidity crunch and start locking down, your "quick access" may not be as quick as you think.
 
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I'd be a little leary of sticking large sums into some of those high-yielding internet banks. Yeah, they're FDIC insured. But, if they do run into a liquidity crunch and start locking down, your "quick access" may not be as quick as you think.
Vanguard's money market funds are composed of something like 150 different holdings. How likely is a liquidity crisis in a fund that's diversified like that?
 
Vanguard's money market funds are composed of something like 150 different holdings. How likely is a liquidity crisis in a fund that's diversified like that?

Sorry, I saw "There are savings accounts at about that rate now..." and completely missed the rest of your post.

A Vanguard money market fund is a pretty far cry from a retail passbook savings account.
 
I know lots of people who chase returns. I also know lots of people who diversify and hold (preferably in low-fee mutual funds). So far, the latter group consistently does better, partly because they incur lower fees. Rebalancing on a regular schedule means you're always selling high and buying low. John Bogle was right.

Active investing (i.e., chasing returns) is like aviation--a great way to turn a large fortune into a small one.
 
Engine rebuild fund, HSA and one other cash account have been in T-Bills for about a year. But have never buy out past 6 months. We haven't had a full tax year yet but no penalties to get out and my understanding is no state income tax. I see the high yield savings accounts but am sick of moving money from one bank to another, etc. Easier to have in a brokerage and change it up quickly if needed.
 
I know lots of people who chase returns. I also know lots of people who diversify and hold (preferably in low-fee mutual funds). So far, the latter group consistently does better, partly because they incur lower fees. Rebalancing on a regular schedule means you're always selling high and buying low. John Bogle was right.

Active investing (i.e., chasing returns) is like aviation--a great way to turn a large fortune into a small one.

The wise lady speaks wise words of wisdom.
:cheerswine:
 
Engine rebuild fund, HSA and one other cash account have been in T-Bills for about a year. But have never buy out past 6 months.

I did that a little differently. I'm pretty diversified, but I have a little money stashed in CDs. They're all 1-year CDs, but staggered three months apart, and I've been rolling them into new CDs when they mature. That way I have access to at least 1/4 of the money each quarter if I need it, but all of it is earning at 12-month rates, currently close to 6%.
 
There may be tax consequences to holding CD's that you don't face holding t-bills. T-bills are taxed at the federal level, but not the state or local.. CD interest can be taxed at all three, depending. If you need ready cash, you can always sell the instrument, but at 4 week reinvest intervals, probably not an issue.
 
There may be tax consequences to holding CD's that you don't face holding t-bills. T-bills are taxed at the federal level, but not the state or local.. CD interest can be taxed at all three, depending. If you need ready cash, you can always sell the instrument, but at 4 week reinvest intervals, probably not an issue.

Probably true some places but not an issue here in Florida.
 
Start with a diversified portfolio. Let your winners ride. Put new money into underweighted funds.

According to one study I’ve seen, that’s the best strategy. Actually, the study found the longer you wait to rebalance, the better your investments will do. You can’t get a much longer than never.

I’ve been doing that for a long time and I often outperform the major market indices. I’ve been killing the market, mostly thanks to my shares of very large hi-tech holding company.
 
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