A safe 7% return on your money

[Triplethought]

Hi,

I've had a lot of talks with people who are frustrated that they cannot get any decent yield on their cash. There may be a solution that can help that currently yields over 7%!

iBonds (Series I bonds) are government-protected, inflation-adjusted bonds that you buy directly at treasurydirect.gov. This article discusses how the rate just went up in November and represents the first time that Ibonds have been this high
https://www.washingtonpost.com/business ... story.html

I established an account at this link. The website is old and klunky and obscure like everything government. Let me know if you need help.
https://www.treasurydirect.gov/indiv/re ... s_ibuy.htm

I just bought some and will see if it hits my account tomorrow. From what I can tell:

1. The interest rate adjusts every six months to keep up with inflation, which is pretty relevant today. The current yield on these bonds is over 7%, which blows away any savings account or CD you can find.

2. You cannot lose principal.

3. They're meant as longer term investments. I believe that if you withdraw your money sooner than five years, then you'd forfeit 3 months of interest, which frankly, is better than a CD's early-withdrawal penalty.

It seems the biggest limitation is that you can only invest up to $10,000 per calendar year. That said, there are some ways to increase the contribution limit:

1. Buy $10k now (in December) and another $10k in a few weeks.
2. If you own a business, it appears the business can ALSO purchase $10k per calendar year.
3. If you have a trust, it appears your trust can ALSO purchase $10k per calendar year.
4. If you're married, but you and your spouse can purchase $10k/calendar year.
5. If you get a tax refund, you can apply $5k of it towards iBonds even if you already purchase $10k in that calendar year.

So for instance, if you're married and also have a trust, I believe you and your spouse could each invest $10k, and each invest $10k in the name of your trust. That's $40k right now, and then you could repeat the procedure in a few weeks when January rolls around. Pretty soon it becomes easy to put a decent slug of cash into this asset class.

Again, I've never paid much attention to this asset since the contribution limits were low and since inflation hadn't been a big deal until recently. So please double check everything I've said above. But right now iBonds seem like a great deal. I've been seeing this concept pop up more and more on financial forums recently.

Just wanted to put this on the radar for some of the folks where we've historically discussed investments.

There is probably something above that I’ve stated incorrectly. I’m not a financial planner so please do your own research.

[nicolas]

Thanks TT, this looks interesting. It seems only US citizens or residents can buy those.

Another idea for investors to get a decent return on excess cash is to look at platforms pooling short-term consumer loans from Eastern Europe. The typical yield is 7-12%.

There are auto-invest options or you can pick individual loans. Most loans have a buyback obligation from the lending company. Still, there's a default risk to consider before investing. No such thing as a free lunch. But the platform lets you build a portfolio with hundreds of small loans to mitigate idiosyncratic risks.

When I researched this niche about a year ago, I shortlisted PeerBerry and Mintos. I opened an account with both, with small amounts to test drive them. Late repayments of 30 to 60 days are common but no default so far. It's been earning a steady income above 10%.

Not a recommendation, just putting it out there in case someone is interested to look into it.

[SOL]

Every 15 to 24 months and we believe the cycle will speed up the market lets out a lot of steam. During those moments one can use excess cash that they are not going to commit or might not commit directly to stocks into selling puts.

If you sell puts on the top stocks at the right, you can easily earn over 20% per year and with a little work north of 40%. You sell puts on top stocks when the market crashes or lets out a healthy dose of steam and it is trading in the oversold ranges on the monthly charts. This strategy works best with top-notch stocks as the volatility means you will earn more on the puts you sell.

The monthly chart of the Dow


Any point at or below the point purple line (going through the MACD's) would be a good time to sell puts on strong stocks.

The monthly chart of AMD



You can clearly see how much you would have made selling puts on AMD. Now one could a special trick use some of the money obtained from selling puts to purchase an out of the money call. Surprisingly AMD is moving to the buy zone again.

This strategy is far superior to almost any other so-called low-risk strategy out there. However, patience and discipline are needed if one is going to book handsome profits.