Long term they’re indexed to inflation and I think the permanent rate right now is 0.8% or something like that. If you’re going to sit in cash long term they’re probably the best or one of the best ways to do it. Short term the high yield savings are doing better.
It really comes down to what the money is for and when you’re going to use it.
Yeah, if you’re maxing out your 401k and Roth, I don’t think a high yield savings account is a bad plan. You could get a slightly higher rate if you want to invest in treasury bills instead, but I do like earning 5% on what is essentially my emergency fund while maintaining easy access to it anytime I would actually need it.
The thing is, it sounds like he has a lot more in there than just his emergency fund.
If they have that much extra, could diversify into real estate.
I hope you’re not under the impression that a 4.65% dividend yield is in any way comparable to an investment like a bond or a CD or a savings account where actual returns are being generated.
A dividend is just a company returning part of your equity to you in cash. The value of the company (and the stock) is reduced accordingly, The result is no net gain.
In an efficient market that’s true, but if the market is fundamentally undervaluing the company then the returned capital is good for the shareholder (because usually the price isn’t going to drop by the full amount of the dividend, or it’s going to be gained back more quickly than it would in an efficient market on a fairly priced stock).
Another way I think about this is, let’s just say BSET is worth $21 because they were offered that and turned it down last year. If I’m expecting it to some day either hit $21 + or be sold for $21 + per share and my time horizon is such that the value between now and then is totally irrelevant to me, every dividend I get in the mean time is extra value for me.
Nah, maxing out my retirement contributions is a more recent phenomenon. I’m certainly under the FDIC limit lol. Disney World isn’t cheap. (Neither is two kids, day care, and all the attendant expenses).
Ah, ok. Another tax advantaged option would be to set up 529s for the kids, if you haven’t already and want to save for their college. I think if they don’t end up needing it you can roll it into a Roth later, but I could be wrong about that. I think @Riverman knows iirc. Feel like he posts about Roth rollovers from time to time.
Also if you’re trying to play some catchup on retirement savings, if you have any self-employment income you could start a SEP-IRA and the contribution limits are higher.
I think the Roth rollover from a 529 is limited to 30k. But you can also just keep compounding and use it for the next generation too.
IIRC you’re in California or NY? The tax advantages are magnified in a high tax state. I would never just load up in a HYSA in those states, you’re paying your marginal tax rate on each incremental dollar of interest income.
This discussion reminds me again how planning saving for retirement remains such a weird thing to my mind after school/early career/etc being decades of short term goals and now suddenly it’s like one of the main life goals you don’t want to mess up is decades away and I’m supposed to have some educated opinion on if I want to work to x age or x+ 10 years or spend Y amount yearly in 30 years. Like obviously I know there all sorts of planning methods but at some level it requires making reasonable guesses about what life looks like in decades
Yes they are not worth it right now, it may be correct to stay in previous position due to the nature of the cash out and losing a few months interest, it really depends on when you bought them. I wouldn’t buy new ones at this point in time
Yeah, already have 529’s.
Correct.
When you run out of tax-advantaged accounts you start putting the money in taxable accounts (which are still a ridiculously good deal in the era of cap gains rates + indexed ETFs).
Yeah, anyone can pay themselves any div % they want on any company stock, and they can do it quarterly or weekly or whenever.
A large fund isn’t going to have their algos mistakenly undervalue a stock for a potential fraction of a % profit for you because a dividend was paid. If a company was determined to be worth $21 yesterday, its going to be valued at 20.80 if it paid out 1% dividend today.
The inefficiency in the market has generally been seen on the high ends of valuation. We saw this at an extreme extent when GME and AMC reported earnings and what the funds were willing to risk.
This isn’t a market for finding undervalued companies with all of the collective eyes on em.
I really need to stress that value investing is really just doing work for money. It’s a hobby for me in the same way that carpentry is a hobby for some people but work for money for other people. It’s a monetized hobby which is nice I guess?
But the core thing to understand here is that you’re basically doing work. If you sit down and analyze a bunch of companies and you have the right skill set to be valuing companies it’s really the same dynamic as a pro poker player sitting at a random table. You’re going to slowly but surely win more than your share.
None of this is worth the time for Wall Street because they need every employee to generate X in revenue and our personal profits on our own small portfolio’s are way too little profit for way too much seniority/time. This is my hobby not my day job I don’t have to make all that much money to make it make sense. I probably could live with losing a little bit over time and I’ve already experienced pretty substantial swings like everyone else has I just felt a little bit more in control and slept a little bit better.
If I’m wrong I retire a few years later than I would have (still probably never), and if I’m right I retire a few years sooner (also still probably never).
why value invest when there’s an inverse cramer EFT, at the end of the day. he’s already done all the work for you.
Fee’s too high. Seriously. Also Cramer is unequally wrong about things. Mostly he just pumps blue chip bullshit without any critical thinking whatsoever. He’s just a sell side clown. There are more egregious examples than him if you go looking for them.
They’re like sports betting touts.
Yup. Occasionally Cramer’s recommendations sure seem to help hedge funds in general exit positions.
Yeah that’s been a theory of mine for a while, I think we’ve both discussed it. Like to have as many ass backwards predictions as he’s had and not get canned… I think he’s like the Bag Passer in Chief.