Always remember when comparing rates that T-Bills and Treasuries are exempt from both State and Local Taxes, so your effective rate is slightly higher. Roughly 0.25% in a state with a 5% income tax for example.
Over the last few years I've watched her videos and learned so much. As I have now transitioned to retirement I still am learning. Thanks for clearcut information in a concise and easily understood format.
I'm with you. Impending recession means rate cuts, lower rates, which only encourages money on the sidelines to get pushed into the market for a better return, pumping up our economy and inflation again. With the trend of countries pulling back from globalism (due to safety concerns, only trading with friendly nations), stuff will get more expensive again. I'm guessing we bounce between 3-5% on average the next decade at least, maybe two.
I think that’s a very fair attitude. The economy right now is definitely temperamental. If that’s fair to say? I certainly don’t feel like everything is absolutely under control from inflation perspective. I see the data reported in the broader metrics, but it’s definitely not as clearcut as a simple graph reporting 3%
It's difficult to find good long-term rates when "everyone knows" the rates are expected to come down soon... which has been the case for the past 18 months.
When I was younger and only had a small emergency fund with even HYSA paying less than 2% it wasn't worth my time to pursue them. My money was just parked in a savings/checking bank. At some point, I saved up a lot more money with pay raises and simultaneously interest rates went above 5% for certain CDs and HYSA. I am kicking myself for not taking advantage earlier, but am ultimately grateful I can take advantage now.
I'm conflicted on this. Restructuring portfolios and investment goals 2 years before retirement from Growth to Growth & Income. All LTCGs taxes paid in 2023. It's been a treat to sit on the remaining cash through 2023 and 2024 to date reinvesting the money market interest/dividends into dividend focused ETFs and stocks without shrinking the cash base at all. Now it seems the party may be winding down. I'm setting a small portion of the portfolio aside in very long bonds in hopes their increase from declining interest rates will counteract the reduction in cash flow generated by the cash held at short term rates. Time will tell if this was a smart move.
Good, balanced discussion Erin. I always enjoy your content, as it is presented in a way that makes you feel like your are sitting down with a friend and having a discussion rather than someone talking at you. Keep up the great content and have a good weekend. See you on the next one. Larry, Central Valley, Ca.
Rapid rate cuts may be good for those addicted to debt, but will not be great in terms on possible return of inflation. I personally hope they stick to the expected 25bps cuts each meeting.
I hope for a *meaningfully* slow rate decrease. Seriously allow each cut to permiate the market before making the next. A cut ever month or two for 6 months is too quick IMO. It made sense to go up quickly to fight that oh so transitory inflation, but we aren't approaching economic collapse so there is no need to rush back down.
Well done, Erin! Once again you've explained an economic concept in a simple way that others overcomplicate, in this case interest rate basis points. I look forward to a gradual easing of interest rates. Personally I'm disappointed with Jerome Powell and this Fed board due to numerous errors in the past, a perfect example being transitory inflation and the statement of planning 6 interest rate cuts last year. I was a very young man when inflation was double digits in this country. A little inflation is good, much more than that is disastrous for the economy and individuals. I am concerned that inflation will return. I'm sure most people that watch your channel know that our national debt is too high, and deficet spending needs to be reduced, if not ended. But neither of the major parties have the willpower to make needed choices. At some point inflation will be an issue because of these two issues, no matter what happens with interest rates. I had planned on retiring in 2025 or '26, but due to inflation, I've had to push off retirement an additional year. I'm hoping for 2027, but we'll see. In the meantime, I will continue to look forward to your videos. You rock, Erin 😊
Thank you so much for your kind words, and thank you for watching! I hope that you have a wonderful retirement when you get to that point. Retirement is absolutely my favorite topic to talk about on this channel. So anytime I get the chance to make a video on a retirement topic, that’s what gets me really excited!
This is America... I'm not sure you have to "encourage" debt. It's in our blood. ;-) But yeah, it is a really good question. If that debt allows home purchases that otherwise wouldn't be doable, then that might not be too bad... But I'm not sure how often that happens, compared to someone who really shouldn't be buying a house because they can't afford it, but with a lower interest rate they go for it anyway.... Hmmm Good question..
I hate to seem so superficial, but wow you're looking great lately. Idk if its that dress (if it is a dress) or what, but wow. Just wow. I'm gonna have to watch the video again so I can actually listen to what you said without being in total awe. 😂
Financial “pros” have dramatically misjudged the timing of rate cuts for more than a year; though it is now clear that the first cut will come this month. I think 50-75 bp total reduction this year is more likely than 100 bp but time will tell. Inflation might be on its way to 2% but it isn’t there yet and it will be unfortunate if inflation gets stuck above 2.5% while the Fed overreacts to jobs and unemployment numbers.
I have been looking at alternatives to Treasuries. It has been a good run with 5+% with no risk on T-Bills which are also not subject to state taxes. And so far, Treasuries (Bills or Bonds) still look the best bet. Thinking about purchasing some more bills and adding bonds for longer term.
I've been buying shorter term T-Bills in order to continue to capture the 5% rate. It's still possible, but only with the 4-week T-Bill. The 8-week will get you approximately 4.95% (close enough really). I've also been buying TLT more aggressively. I plan to hold until it reaches 110. At that point, I will very slowly sell the highest cost basis shares that I've held for at least one year. I'm thinking that TLT has a good chance to see 120 to 125 at the end of the Fed easing cycle. I expect the easing cycle to end when interest rates are about 2.5% to 2.75%, which is about 225 basis points lower than where we are now.
You prepare your vids very well! And well spoken! I retired last year and have learned a lot as well as patted myself on the back from right decisions that I’d already made thanks to your info 😊
My wife and I have a fully funded emergency account of about 12 months in HYSA... on top of that we have short-term T- bills and 1+year I- bond of another 12 months of expenses.... we max out our 401k, Roth IRA and HSA accounts, and have 25% net left over... what's your advice on should we invest all of remaining, or save some and invest some?
I luckily had 2 12-month CD's renewing in past 4 months, pulled them out to 3 yr at 4.45 and 4.25, I'll live with it. The rest are coming up in Nov and Dec, so I'll just have to wait and see on them and whether it is worth renewing at 12 or pushing them out further.
One thing that's important to remember with rate increases or cuts is that there is always a lag when it comes to seeing the true effects of these increases/cuts. In other words, it will likely take a while if they cut rates before we see how much it helps/hurts consumers. While I think rates on things like CD's or T-Bills will come down, it will take some time and won't happen overnight, so I think we are all safe to continue to use these for the foreseeable future to get some easy money. It may be a couple of years before we see the true effect of the rate cuts.
Not sure what to do with my short term cash. VMFXX has been killin it and its so simple. I doubt many CDs will beat it even in the next 6 months so I'm probably not going to do anything.
I took a portion of my VMFXX last month and locked in rates on a 6 month, 1 yr and 2 yr CD ladder, anticipating rate cuts. Time will tell if it’s the right call but it will not be a huge impact on the portfolio.
Great discussion, thank you! But how are credit card rates going to be affected? I remember way back when (20 years ago?), all of my credit cards were charging less than 10 percent. When Fed rates started falling toward zero, my credit card rates started rising - an inverted correlation! A couple of mine went up as high as above 20 percent, even before this latest trend of rising Fed rates. So what’s likely to happen going forward?
For me, I purchased my first house in 1991 and was super pleased with a low interest rate of 9.5%. Now retired, interest rates are fine where they are since I like earning more money with the safe money.
Thanks Erin. These are complex financial times to say the least. Im sure the upcoming election will have an impact as well. Your analysis & reports are very helpful. Best Always & looking forward to more. ~BobV
Erin, Im not quite sure that these cuts will drop rates on mortgages much. Many foreign investors and indeed foreign governments are avoiding 10 year bonds. When they drop the rates it will weaken the dollar as well. If the Federal government wants to im rease their debt sales they can make the interest on US debt Federal tax free.
Dave Ramsey says dont' waste most of your mental energy chasing small returns. Focus on bis returns. So instead of moving from bank to bank to get 1% more interest on a couple thousand dollars, instead get the best investments that are most tax-advantaged and find ways to put in more money earning between 10-25% return.
Thanks for the prodding to take the safe, guaranteed return while that option's still available, always a sound idea. Being a mom agrees with you, you look as content, healthy, and happy as can be. Good for you!
I-Bonds are also an option, if you are willing to lock up your money for a long time (at least one year). If you purchase one before November, you can lock in a composite rate of 4.28% for the next six months. The fixed rate for these bonds is 1.3%. The composite rate for the November I-Bonds will almost certainly be lower due to inflation continuing to cool.
If interest rates decrease at will be good for my industry, tech. Its hiring market has been a blood bath since they raised rates, so hopefully that mellows out after a few quarters.
@@ErinTalksMoney The boom of the tech industry depended on low interest rates that made it cheap to borrow money to invest in tech businesses and startups. That money also went to salaries. When it became more expensive to borrow money because of the interest rate rise, the layoffs followed. I survived a major round of layoffs and a couple "quiet" ones, plus we had salary and hiring freezes. Some perks were pulled back. Looking for another job got harder because there are more unemployed software engineers out there. And even then, the offers are lower than they were because they know it's harder to get an engineering job now. I'm hoping that the tech CFOs will see any interest rate decrease with optimism, so everyone loosens their purse strings a little more.
Hi Erin, I would love to invite you on Masters of the Market, my podcast series about investing. The email is not working on YT so testing my luck here!
Always remember when comparing rates that T-Bills and Treasuries are exempt from both State and Local Taxes, so your effective rate is slightly higher. Roughly 0.25% in a state with a 5% income tax for example.
Great tip!
Over the last few years I've watched her videos and learned so much. As I have now transitioned to retirement I still am learning. Thanks for clearcut information in a concise and easily understood format.
This makes me so happy to hear!! Happy retirement!!
Engagement comment for Erin. Keep up the great work!
Thanks Luke!
Great video. I have a wait and see attitude on inflation. Not really convinced it’s on the way down
I'm with you. Impending recession means rate cuts, lower rates, which only encourages money on the sidelines to get pushed into the market for a better return, pumping up our economy and inflation again. With the trend of countries pulling back from globalism (due to safety concerns, only trading with friendly nations), stuff will get more expensive again. I'm guessing we bounce between 3-5% on average the next decade at least, maybe two.
I think that’s a very fair attitude. The economy right now is definitely temperamental. If that’s fair to say? I certainly don’t feel like everything is absolutely under control from inflation perspective. I see the data reported in the broader metrics, but it’s definitely not as clearcut as a simple graph reporting 3%
Lucky me, my CD just matured this week. Locked in them high rates for the next year. Sadly the longer term CDs are not great
It's difficult to find good long-term rates when "everyone knows" the rates are expected to come down soon... which has been the case for the past 18 months.
CD's are not the best place for your cash, inflation will turn your cash to pennies . Buying assets are better.
@@darrylloo4080 i cant invest it. Its part of my emergency fund
@@darrylloo4080 different situations for different buckets
Your answer doesn’t fit all situations
@@darrylloo4080 its part of my emergency fund. Cant invest it.
When I was younger and only had a small emergency fund with even HYSA paying less than 2% it wasn't worth my time to pursue them. My money was just parked in a savings/checking bank. At some point, I saved up a lot more money with pay raises and simultaneously interest rates went above 5% for certain CDs and HYSA. I am kicking myself for not taking advantage earlier, but am ultimately grateful I can take advantage now.
It matters most is that you are taking advantage now!
I'm conflicted on this. Restructuring portfolios and investment goals 2 years before retirement from Growth to Growth & Income. All LTCGs taxes paid in 2023. It's been a treat to sit on the remaining cash through 2023 and 2024 to date reinvesting the money market interest/dividends into dividend focused ETFs and stocks without shrinking the cash base at all. Now it seems the party may be winding down. I'm setting a small portion of the portfolio aside in very long bonds in hopes their increase from declining interest rates will counteract the reduction in cash flow generated by the cash held at short term rates. Time will tell if this was a smart move.
Thanks for your videos! I’ve found your channel recently and have enjoyed the content!
Awesome, thank you! And welcome to the channel! 😊
Good, balanced discussion Erin. I always enjoy your content, as it is presented in a way that makes you feel like your are sitting down with a friend and having a discussion rather than someone talking at you. Keep up the great content and have a good weekend. See you on the next one. Larry, Central Valley, Ca.
That makes me so happy to hear! I want the channel to have a casual very approachable feel. 😊 I hope you have a great weekend Larry!
Hi Erin, great video! You look amazing this morning. Hope you have a blessed weekend 😊
Thanks so much, Mark! I hope you have a great weekend!
Rapid rate cuts may be good for those addicted to debt, but will not be great in terms on possible return of inflation. I personally hope they stick to the expected 25bps cuts each meeting.
I hope for a *meaningfully* slow rate decrease. Seriously allow each cut to permiate the market before making the next. A cut ever month or two for 6 months is too quick IMO. It made sense to go up quickly to fight that oh so transitory inflation, but we aren't approaching economic collapse so there is no need to rush back down.
SoFi started dropping, it was 4.6%and they dropped to 4.5% small but noticed.
Yep. Less than a week ago. Mine was hit as well.
Well done, Erin! Once again you've explained an economic concept in a simple way that others overcomplicate, in this case interest rate basis points. I look forward to a gradual easing of interest rates. Personally I'm disappointed with Jerome Powell and this Fed board due to numerous errors in the past, a perfect example being transitory inflation and the statement of planning 6 interest rate cuts last year. I was a very young man when inflation was double digits in this country. A little inflation is good, much more than that is disastrous for the economy and individuals. I am concerned that inflation will return. I'm sure most people that watch your channel know that our national debt is too high, and deficet spending needs to be reduced, if not ended. But neither of the major parties have the willpower to make needed choices. At some point inflation will be an issue because of these two issues, no matter what happens with interest rates. I had planned on retiring in 2025 or '26, but due to inflation, I've had to push off retirement an additional year. I'm hoping for 2027, but we'll see. In the meantime, I will continue to look forward to your videos. You rock, Erin 😊
Fed never planned 6 cuts last year
Thank you so much for your kind words, and thank you for watching! I hope that you have a wonderful retirement when you get to that point. Retirement is absolutely my favorite topic to talk about on this channel. So anytime I get the chance to make a video on a retirement topic, that’s what gets me really excited!
Is it really wise to be encouraging still more debt in this country via interest rate cuts? Just wondering out loud.
This is America... I'm not sure you have to "encourage" debt. It's in our blood. ;-)
But yeah, it is a really good question. If that debt allows home purchases that otherwise wouldn't be doable, then that might not be too bad...
But I'm not sure how often that happens, compared to someone who really shouldn't be buying a house because they can't afford it, but with a lower interest rate they go for it anyway....
Hmmm Good question..
I mean, if it lets my friends refinance their mortgages for cheaper, I’m all for it.
I hate to seem so superficial, but wow you're looking great lately. Idk if its that dress (if it is a dress) or what, but wow. Just wow. I'm gonna have to watch the video again so I can actually listen to what you said without being in total awe. 😂
Financial “pros” have dramatically misjudged the timing of rate cuts for more than a year; though it is now clear that the first cut will come this month. I think 50-75 bp total reduction this year is more likely than 100 bp but time will tell. Inflation might be on its way to 2% but it isn’t there yet and it will be unfortunate if inflation gets stuck above 2.5% while the Fed overreacts to jobs and unemployment numbers.
Inflation on average is like 3.7%, 2.5% would still be fine.
Your comment is well intentioned but ironically falls into the same cycle as any other financial pro.
I have been looking at alternatives to Treasuries. It has been a good run with 5+% with no risk on T-Bills which are also not subject to state taxes. And so far, Treasuries (Bills or Bonds) still look the best bet. Thinking about purchasing some more bills and adding bonds for longer term.
I've been buying shorter term T-Bills in order to continue to capture the 5% rate. It's still possible, but only with the 4-week T-Bill. The 8-week will get you approximately 4.95% (close enough really). I've also been buying TLT more aggressively. I plan to hold until it reaches 110. At that point, I will very slowly sell the highest cost basis shares that I've held for at least one year. I'm thinking that TLT has a good chance to see 120 to 125 at the end of the Fed easing cycle. I expect the easing cycle to end when interest rates are about 2.5% to 2.75%, which is about 225 basis points lower than where we are now.
You prepare your vids very well! And well spoken! I retired last year and have learned a lot as well as patted myself on the back from right decisions that I’d already made thanks to your info 😊
That makes me so happy to hear! I hope you have a wonderful retirement 😊
A high-dividend aristocrat stock is a much better place to put your money because your money will snowball if you reinvest.
Thanks for another great video Erin! Just bought my first CD this year and I always value your insights! I can tell you have been working out!💪
That’s so awesome Nathan! I hope you have a wonderful weekend 😊
@@ErinTalksMoneyThank you! Hope you have a wonderful weekend as well!
My wife and I have a fully funded emergency account of about 12 months in HYSA... on top of that we have short-term T- bills and 1+year I- bond of another 12 months of expenses.... we max out our 401k, Roth IRA and HSA accounts, and have 25% net left over... what's your advice on should we invest all of remaining, or save some and invest some?
I luckily had 2 12-month CD's renewing in past 4 months, pulled them out to 3 yr at 4.45 and 4.25, I'll live with it. The rest are coming up in Nov and Dec, so I'll just have to wait and see on them and whether it is worth renewing at 12 or pushing them out further.
One thing that's important to remember with rate increases or cuts is that there is always a lag when it comes to seeing the true effects of these increases/cuts. In other words, it will likely take a while if they cut rates before we see how much it helps/hurts consumers. While I think rates on things like CD's or T-Bills will come down, it will take some time and won't happen overnight, so I think we are all safe to continue to use these for the foreseeable future to get some easy money. It may be a couple of years before we see the true effect of the rate cuts.
Not sure what to do with my short term cash. VMFXX has been killin it and its so simple. I doubt many CDs will beat it even in the next 6 months so I'm probably not going to do anything.
I locked in 12 month CDs at 5% with Marcus.
Yeah I would probably do a 9 month as I plan to use the money in about 12 months.
I like to think about it on the margins. If it’s more than a marginal difference, might be worth the move. If not, might not be worth a move.
I took a portion of my VMFXX last month and locked in rates on a 6 month, 1 yr and 2 yr CD ladder, anticipating rate cuts. Time will tell if it’s the right call but it will not be a huge impact on the portfolio.
@SpookyEng1 that's where I'm at. The impact for me will likely be like $200 max
Great discussion, thank you! But how are credit card rates going to be affected? I remember way back when (20 years ago?), all of my credit cards were charging less than 10 percent. When Fed rates started falling toward zero, my credit card rates started rising - an inverted correlation! A couple of mine went up as high as above 20 percent, even before this latest trend of rising Fed rates. So what’s likely to happen going forward?
great hair day !!!!
😊
I had T-bills, but chose cds this last go around. I laddered 3 of them. The first one is mature this December. I wish I’d secured them for longer. 😢
My favorite UA-camr!
Yay! 😁
For me, I purchased my first house in 1991 and was super pleased with a low interest rate of 9.5%. Now retired, interest rates are fine where they are since I like earning more money with the safe money.
Thanks for the great video and insights.
Thanks Erin. These are complex financial times to say the least. Im sure the upcoming election will have an impact as well. Your analysis & reports are very helpful. Best Always & looking forward to more. ~BobV
Thanks so much, Bob! It’ll be a very interesting election for sure!
Erin looks so cute today and good advise thanks Erin
Thanks for watching! 🙏
I constructed a 5 year treasury ladder in early July. 4.65 to 4.25%, average 4.45%. I hate that I’ll pay taxes at non- preferred rates
Erin, Im not quite sure that these cuts will drop rates on mortgages much. Many foreign investors and indeed foreign governments are avoiding 10 year bonds. When they drop the rates it will weaken the dollar as well. If the Federal government wants to im rease their debt sales they can make the interest on US debt Federal tax free.
Dave Ramsey says dont' waste most of your mental energy chasing small returns. Focus on bis returns. So instead of moving from bank to bank to get 1% more interest on a couple thousand dollars, instead get the best investments that are most tax-advantaged and find ways to put in more money earning between 10-25% return.
That’s a great idea … if it’s guaranteed.
Thanks for the prodding to take the safe, guaranteed return while that option's still available, always a sound idea. Being a mom agrees with you, you look as content, healthy, and happy as can be. Good for you!
THANKS for the updates.
Thanks for watching!
Thanks for the summary.
I also have a 2 to 3 year treasury ladder
It's in a
treasury direct account and it's nice that they will withhold taxes for you.
4-wk T-bills already dipped below 5% and Feds haven't even cut rates yet😒
I-Bonds are also an option, if you are willing to lock up your money for a long time (at least one year). If you purchase one before November, you can lock in a composite rate of 4.28% for the next six months. The fixed rate for these bonds is 1.3%. The composite rate for the November I-Bonds will almost certainly be lower due to inflation continuing to cool.
Great addition!
Thanks for the advice.
Thanks for watching! 😊
Personally, I am thinking of buying a gold fund and holding for a while.
You look amazing Erin!
Thanks!
50 points Sept 17-18. Fed will throw Harris Walz a Hail Mary
If interest rates decrease at will be good for my industry, tech. Its hiring market has been a blood bath since they raised rates, so hopefully that mellows out after a few quarters.
I’ve been reading a lot about the tech industry. I’d be so curious to hear your insights as an insider.
@@ErinTalksMoney The boom of the tech industry depended on low interest rates that made it cheap to borrow money to invest in tech businesses and startups. That money also went to salaries. When it became more expensive to borrow money because of the interest rate rise, the layoffs followed.
I survived a major round of layoffs and a couple "quiet" ones, plus we had salary and hiring freezes. Some perks were pulled back. Looking for another job got harder because there are more unemployed software engineers out there. And even then, the offers are lower than they were because they know it's harder to get an engineering job now.
I'm hoping that the tech CFOs will see any interest rate decrease with optimism, so everyone loosens their purse strings a little more.
I am so ready to refinance my mortgage!!
She's so beautiful. Never thought I'd have a UA-cam crush 🤧
😂😂
Thanks for watching!!
@@ErinTalksMoney thanks for replying 😭😂
Raise them TWO or THREE per cent ...
or watch the Depression bloom.
Hi Erin, I would love to invite you on Masters of the Market, my podcast series about investing. The email is not working on YT so testing my luck here!
🔥 🌧 🌈 🌊 ⛵
How is this woman not married? Gentlemen we are failing society.
I thought she was married, as she's spoken of her hubby having served in the military. Lucky, lucky man, of course!
No bloopers? Not fun..😮
Bloopers are coming back next week! 😂
@@ErinTalksMoney Awesome 👌 👏