Finance and interest rates

[Ray,IN]

Ever wonder why savings accounts don't pay  much interest even though when you inquire about financing, interest rates are many times what you get on your money? This is why and why:https://www.msn.com/en-us/news/politics/the-great-american-homewashing-is-happening-under-our-noses/ar-AA14ySu0?ocid=msedgdhp&pc=U531&cvid=cbfe026d08b7421cb0b227b2c0f7c099

I found the article very  interesting and informative.

Edited November 27, 2022 by Ray,IN

[Kirk W]

That is an interesting article and does suggest we should address it with our elected representatives.  For me it is timely as I just recently was shopping for another CD. Our bank's best CD rate was only 3.2% for a 1 year while my broker got me 4.3% for 1 year. An interesting thing also was that the rate for 1 & 2 year CD's was the same in most sources, at 36 months the rates would typically be down a half point and at 48 months 2 points. Since I have not had a mortgage in a long time I don't always follow those but here is an interesting article from Forbes about the future of those rates. Our sons currently have mortgages one at 2.24% and the other at 3%.  

Mortgage Rates Forecast For 2022

Since we no longer have any loans and are at an age where 20 years in the future is unlikely, CD rates are of far more interest. The following is from Forbes Advisor.

Will CD Rates Go Up in 2023?

"The best CD rates in 2022 are already appealing, but 2023 CD rates are likely to climb even higher. The Federal Reserve is expected to increase interest rates in 2023 to combat inflation, albeit slower than it did in 2022. Expect rates to go up in 2023 but not as quickly and not by as much as in 2022."

[Ray,IN]

I haven't looked up CD rates from my  bank, however I am considering a 6-month treasury bill @4,54% for the MRD I must withdraw before years end from my IRA.

That's the highest interest rate I've found and risk is very small.

[Kirk W]

Daily Treasury Bill Rates

I don't get into bitcoin, but it does make for some interesting reading, Here is what Market Watch has to say about it's future.

Opinion: Will crypto survive? Sadly, the FTX debacle is unlikely to be the last

Edited November 28, 2022 by Kirk W

[RV_]

Ray that is a good article and explains the greed that the banks exhibit once they got away with first a bail out in 2008, then getting the "Bail-In" legislation passed a few years later, and then the almost free money from the fed while paying us little, and now the FHLB scam. All at taxpayer expense. But it is easier to read on the original age here: https://thehill.com/opinion/finance/3750121-the-great-american-homewashing-is-happening-under-our-noses/

Thanks I will be writing my representatives now that I know about it.

Great catch Ray.

This has nothing to do with our mortgage costs or bank CD rates. In the article it says:

"The FHLBs borrow at a deep discount due to their government status. They then pass part of the government subsidized discount on to their members in the form of low-cost advances. As of Sept. 30, the FHLBs had over $1 trillion in taxpayer-subsidized debt outstanding. Subsidized advances to members stood at $655 billion, an 86 percent increase over year-end levels. 

It is all based on a myth.

The first part of the myth is that the subsidized advances to members are used for housing. This was the original purpose of the FHLBs when they were created by Congress in 1932.

In truth, the FHLBs’ subsidized advances can be and are used for anything the members wish to use the funds for. This was confirmed by the Government Accountability Office many years ago when it found: “Another challenge facing the system is that there is limited empirical information on the extent to which FHLBank advances and other services benefit housing and community finance.” Yet, the myth persists, presumably because the words “Home” and “Loan” are misleadingly embedded in the names of all 11 FHLBs.

The second part of the myth has to do with affordable housing and community development. By statute, the FHLBs are required to set aside a small portion of their earnings for this purpose. However, when one contrasts the taxpayers’ estimated $6.3 billion taxpayer subsidy of the FHLBs with their paltry contributions to affordable housing and community development, the payout looks like this: 

Big scam and smoke and mirrors for the benefit of the wealthy and banks.

Thanks again.

Source: https://thehill.com/opinion/finance/3750121-the-great-american-homewashing-is-happening-under-our-noses/

Edited November 28, 2022 by RV_

[Ray,IN]

Crypto is not for me either, it's just a volatile as trading in derivatives IMO, and at 80, safe secure investments is my method. I had my IRA mutual funds in high income risky funds up until I hit 72, then switched to safer less risk funds.

This years minimum required withdrawal will be re-invested in treasury bills for the previously stated reasons.

 

Derek, I've been emailing that article to as many people as I think may be interested. Thanks for locating the original article.

Writing our elected representatives is our only option to create change.

Edited November 28, 2022 by Ray,IN

[Kirk W]

6 hours ago, Ray,IN said:

at 80, safe secure investments is my method.

I have slowly shifted the mix of various investments, starting at 71 when I first took the RMD. Over the years since it has slowly but steadily become more conservative but remains a mix. A few years ago we came to the conclusion that we have reached a point that we are extremely unlikely to outlive our funds and so have begun to spend those annual RMD distributions since we didn't build the investment value to leave behind. We now take cruises and such types of luxury trips as we didn't think that we could afford in the past. Our 3 son's are onboard with this practice. 

Edited November 29, 2022 by Kirk W

[Kirk W]

Currently for short term investments of ready cash, Treasury Bills are looking very attractive. Since we have been spending our RMD's on bucket list items but won't be using much of it right away, I plan to put most of mine into T-bills.

 

[RV_]

Good plan Kirk, I may join you.