| You Will Be Amazed By Which Is The Worst Over | | | | Some recommend putting aside three months' |
| The Long Haul | | | | income to protect against layoff or an emergency. |
| What is the best type of beginner investing? Where | | | | Find the best rate you can get for this money but |
| you can put your money for safety? | | | | make sure you can get it easily if you need it quickly. |
| Isn't that what we'd all like to know? | | | | Ten thousand dollars invested in T-Bills over time |
| Obviously the answer depends on your goals and | | | | would yield average annual interest of just $380. Not |
| your temperament but for the average person the | | | | startling but a far cry from rates today. |
| most probable answer is stocks. The results alone | | | | When interest rates improve again (and they will |
| demonstrate it and I'll show them to you before | | | | because of impending inflation) banks will then think |
| we're done. | | | | they have something to brag about regarding their |
| Of course, you might expect me to say this because | | | | interest rates. They will then give just a small part of |
| this is what I have been involved in for the past | | | | the truth in their advertisements. |
| fifty-five years. But let me share with you what the | | | | Oops! They forgot to mention... |
| Federal Reserve database in St. Louis says. Their | | | | They forget to tell us that federal tax people on |
| figures start in 1928 when stocks rose an | | | | average will claim $95 as their due. And then there |
| extraordinary 43.81% - just before the start of The | | | | are local taxes averaging $36.86. But the granddaddy |
| Great Depression - to December 31, 2008. | | | | is inflation which, over the same 80-year period, has |
| The Fed data records profitability of three-month | | | | averaged 3.4%. Say goodbye to another $340 of |
| treasury bills, 10-year treasury bonds and the stock | | | | your $380 advertised income! |
| market. In all cases, the only capital invested was | | | | As a reward for lending the bank $10,000 which it |
| $100 80 years ago. The treasury bills were renewed | | | | then lends to others at much greater rates of |
| every 90 days. The 10-year bonds include capital | | | | interest your purchasing power declined by $91.86. |
| appreciation and stocks assume dividends are | | | | That's for one average year. Calculate that over any |
| reinvested. | | | | number of years and you will fully understand why |
| T-Bills and bank interest much the same | | | | banks and similar vehicles are dangerous places to put |
| I speak of T-Bills because their return over time is a | | | | investment capital. |
| matter of public record; bank interest varies | | | | Safety is not about protecting dollars; it is about |
| fractionally from one bank to another. T-Bills typically | | | | protecting buying power. For your generosity in |
| pay a slightly higher rate of interest than a bank | | | | lending banks your cash from which they can make |
| savings account so they will serve as a proxy as I | | | | more cash you should be able to purchase more of |
| try to show you why your savings should not be in a | | | | the things you need in future years, not fewer. |
| bank. | | | | To keep these articles reasonably brief I'll continue |
| Any knowledgeable adviser will warn of the danger | | | | with rewards from bonds and stocks next time. Find |
| of investing in bank savings accounts for more than a | | | | out where the real money is made over the long |
| few months and then only with capital saved for a | | | | term! You'll be amazed by what $100 grows into |
| specific short-term purpose. Treasury bills and money | | | | even after The Great Depression and all the bear |
| market mutual funds are not much different in their | | | | markets and recessions after that. |
| results - terrible! | | | | |