Will Fixed Income ever return?

[Mat4644]

The only guaranteed fixed income these days are a Gov job or Gov pension.

 

[WM75Guy]

The only guaranteed fixed income these days are a Gov job or Gov pension.

The government defined benefit pensions are going away in some places. Most government plans are underfunded and entities are scrambling to fund them. New State of Texas employees hired after 09/01/22 will get what is basically a 401K plan. Employee has to contribute 6%. There is a guaranteed 4% interest rate with a possibility of up to 7%, plus a 150% match at retirement. Law enforcement and custodial employees can contribute an extra 2% into a separate fund, with a 300% match at retirement. When you retire it's your money, you determine how much and when to withdraw funds just like a 401K.

If you don't reach retirement age there are no matching funds.

 

[MoKelly]

I’m so glad I have a defined benefit pension from work (private company).

It’s a huge benefit younger workers never appreciated.

MoKelly

 

[KennyG]

I’m so glad I have a defined benefit pension from work (private company).

It’s a huge benefit younger workers never appreciated.

MoKelly

I have an annuity from the defined benefit program that was terminated in favor of a 401k. It's nice, pays a little more than my social security which is the max you can get (always maxed out on contributions, waited until 70 to draw). However, the Required Minimum Distribution from my 401K is larger than the annuity and social security combined. All it takes is a little discipline and education on the value of investing.

 

[MoKelly]

I have an annuity from the defined benefit program that was terminated in favor of a 401k. It's nice, pays a little more than my social security which is the max you can get (always maxed out on contributions, waited until 70 to draw). However, the Required Minimum Distribution from my 401K is larger than the annuity and social security combined. All it takes is a little discipline and education on the value of investing.

401k’s are great - especially when the employer provides a match! Hard to beat the return of an employer match.

MoKelly

 

[gbw]

The U.S. has borrowed a huge lot of money, but very inexpensively, due to low rates over the past few years.

Have we borrowed too much? If rates do double, or eventually even triple, which doesn’t seem too far fetched, I wonder can the government afford the equivalent rise in interest expense?

If so, how? Has economic growth been enough to cover it?

 

[Frankenkubota]

The U.S. has borrowed a huge lot of money, but very inexpensively, due to low rates over the past few years.

Have we borrowed too much? If rates do double, or eventually even triple, which doesn’t seem too far fetched, I wonder can the government afford the equivalent rise in interest expense?

If so, how? Has economic growth been enough to cover it?

its all based on growth, once that stops, if ever, the house of cards collapses

amazing to me how many band aids they can come up with, seems to be working so far.

 

[KennyG]

its all based on growth, once that stops, if ever, the house of cards collapses

amazing to me how many band aids they can come up with, seems to be working so far.

A certain amount of deficit spending can be counteracted by growth. However, there is a new economic theory called Modern Monetary Theory that says deficit spending doesn't matter at all. That's what we are running the US economy on now. It will work until it doesn't work anymore. Then brace yourself for a long correction.

 

[Frankenkubota]

A certain amount of deficit spending can be counteracted by growth. However, there is a new economic theory called Modern Monetary Theory that says deficit spending doesn't matter at all. That's what we are running the US economy on now. It will work until it doesn't work anymore. Then brace yourself for a long correction.

4 or 5 countries on the planet that don't have debt.....and you never heard of those countries, no offense.

it tickles me to think, who's on the other side of the deal?

reminds me of my buddies and i playing poker when about 16 years old....nobody had money, IOUs everywhere, traded between debtors etc....and we all Knew it was BS....like now.

let's just try to get to tomorrow and hope it all works out.

 

[ruffdog]

Rates will rise. The Fed has been buying $80 billion of Treasuries every month since the pandemic. This demand lowers the yields (demand raises bond prices thereby lowering the yield) but puts lots of liquidity into the economy.

Tapering back from these policies is going to cause pain but so is continuing them long term. Will anything change before the mid-terms? I doubt it. Short term bonds may go up a bit but I think long term notes are going to be stagnate for some time. I think inflation will turn back as consumers reject the higher costs and the economy isn't strong enough to support them.