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Zero chance.. like seriously zero chance:PFollow

#1 May 06 2011 at 6:28 PM Rating: Default
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http://www.marketwatch.com/story/zero-chance-greece-to-ditch-euro-papademos-2011-05-06

We live in interesting times. Germans all of a sudden noticed that,maybe, fiscal union might be more costly ( ie. fairly recent bailout ) than initially anticipated. I was loling hard when France was essentially saying: come on Germany, you has the money, help the lil Greece.. was good times.

But yeah, no chance of Greece ditching euro:P
#2 May 06 2011 at 6:45 PM Rating: Excellent
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"restructuring" is just another way of saying corporate sell offs.

Who do we all owe all these debts to, anyway?

I mean seriously, can someone answer that for me? Who does America owe their debt to?

Who does Canada owe their debt to? Greece? Any country...

It seems like almost every country in the world has a debt (how many countries don't?)

Who do we owe all this money to?
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#3angrymnk, Posted: May 06 2011 at 6:48 PM, Rating: Sub-Default, (Expand Post) Couldn't resist:>
#4 May 06 2011 at 6:49 PM Rating: Good
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The Swiss. Everyone owes the Swiss. Even the Swiss owe the Swiss.
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#5 May 06 2011 at 6:53 PM Rating: Good
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Treasury list of nations we owe.

China and Japan are our biggest lenders by a long shot.
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#6 May 06 2011 at 8:29 PM Rating: Good
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Government debt is weird. It's not done in giant loans, but instead, in the form of treasury bonds. The US (and other countries) has these for sale, and anyone pretty much can buy them. They mature in a length of time, at which point you collect the bond and an amount of interest on them. You'll probably make more money on the stock market in that length of time, but bonds are a much more secure investment since the US is pretty much guaranteed to pay them back.

So Japan and China buy up quantities of them (and so do American citizens - lots of grandmas buy the 20 year bonds for grandchildren for college) and then the US has to pay up those bonds at the time of maturation.

That's pretty much how wars and **** were funded back in the day. Ever hear of WWII war bonds? Funny how we never got any Afghanistan war bonds, or Desert Storm war bonds. I guess there wasn't much of a need, what with China snapping up normal treasure bonds left and right because it was considered a surefire investment.
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#7 May 06 2011 at 8:32 PM Rating: Excellent
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Treasury bonds might be good for large investors like countries, but they're terrible investments for an individual. You might as well stick the money in a CD.

Edited, May 6th 2011 9:33pm by Sweetums
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#8 May 06 2011 at 8:47 PM Rating: Good
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Treasury bonds might be good for large investors like countries, but they're terrible investments for an individual. You might as well stick the money in a CD.


Well, it depends on who you are. They used to be popular baby gifts in general, and no one outside the family was going to be opening a savings account.

Plus, while they are less profit than certain savings programs, they're more reliable than them and stocks (at the moment). If the bank you uses goes bankrupt, you'd end up in a pretty rough spot. And stocks can obviously crash (I know you didn't mention them).

I think I actually have bonds that I can cash in... I should ask my parents about that.

They used to be super popular, way back when (like in the late 1700s through the early 1900s). Unless you had a literal gold mine, or gemstones and such, you generally stored your fortunes as gov't bonds (which were also treated somewhat like gov't stock, because the payout was a guaranteed amount in your country's currency, which meant the value of different bonds fluctuated as time went on).

If your gov't was stable (and not apt to inflation), it was a very wise move. If it isn't, it's a horrible one. For example, America during the Great Depression. The value of money dropped so significantly that bonds became nearly worthless. It was much better for people who had invested money in practical items that they could sell/trade for the goods they needed.

But there's a flip side to that. The more people buying bonds, the more money the gov't has. And if it's ultimately turning a profit, like the US was for a long while, then buying them is great for the economy.
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#9 May 06 2011 at 8:48 PM Rating: Good
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CDs are FDIC insured. Unless you're putting 100,000 in a CD, which is stupid for reasons beyond the lack of insurance, you'll be fine. People make savings accounts for their children all the time.

Edited, May 6th 2011 9:51pm by Sweetums
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#10 May 06 2011 at 8:57 PM Rating: Good
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Isn't the minimum investment for a CD $500 though? The Treasury website tells me the min for a bond is $100. Lower investment, lower interest, lower yield. Makes sense.

And since most people probably aren't prepared to give a $500 gift, it's not surprising they give bonds.

Actually... it looks like the interest rate for a US bond is somewhere around 4%, every 6 months, for 30 years (IDK if old ones had shorter maturation times).

Don't CDs have like 1-3% APY generally? That's a MUCH smaller return, especially if you buy the cheaper ones... It's compounded by the fact that they mature much faster though.

[EDIT]

Okay... I'm getting really confused... I'm seeing many conflicting things about the interest rates for government bonds.

Still though, the lowest I've seen is about equal with the CD APY rate, except it's biannual, so it's even better.

Edited, May 6th 2011 10:59pm by idiggory
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#11 May 06 2011 at 9:07 PM Rating: Good
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Ally offers CDs with no minimum deposit. You have to look around; different banks offer different terms.

I was looking at Treasury bonds a few weeks ago for kicks, and given equal time, the bond rates are abysmal. As in, a 1 year bond has less than a 1% return.

So my TreasuryDirect account is pretty much going unused.

Treasury bonds are a kind gesture, but still a terrible investment.
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#12 May 06 2011 at 9:37 PM Rating: Good
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Though the 30 year bonds have an interest rate of 3-4+%, biannually. A $100 bond would pay out at $328.10. Not bad. I honestly don't know what other investment programs would give, but tripling an investment over 30 years is pretty nice.

But let's talk about 20 year bonds, since they're most likely to be given as gifts I'd imagine.

1% interest- $122.08
2% interest- $148.89
3% interest- $181.40
4% interest- $220.80
5% interest- $268.51

Doesn't seem that bad of a gift to me. I've been googling, and I can't find any 20 year CDs with above a 4% APY. And that's going to be a much lower yield, since it's annual instead of biannual. And most don't even last that long--I'm seeing 1 to 5 year CDs with 1-2% APY.

Bonds look like a much better investment to me.

[EDIT]

I think the relevant issue here is time. If you are looking for a fast increase, then a CD is probably better. But if you are looking for a longer investment, bonds are far from being a crappy choice.

Edited, May 6th 2011 11:41pm by idiggory
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#13 May 06 2011 at 9:40 PM Rating: Good
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That is a terrible return over 30 years. The market usually gets you ~8% returns, depending on how aggressively you invest. 3-4% is barely keeping you above inflation.

You don't actually want a 20 year CD, especially since interest rates are at an all time low. Your money is stuck. For 20 years. I was making fun of treasury bonds, because CDs are not a very good store of value, either. I only keep around ~500 in CDs right now, and that's mostly to not look at it in my savings account balance. I'd rather stuff more into my Roth first.

Ideally, you'd open a 529 for the kid and let the nest egg grow tax-free. You pay them upon withdrawal.

As I said, kind gesture, terrible investment.

edit: i hate mistyping the account types



Edited, May 6th 2011 11:02pm by Sweetums
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#14 May 06 2011 at 10:00 PM Rating: Good
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That is a terrible return over 30 years. The market usually gets you ~8% returns, depending on how aggressively you invest.

You don't actually want a 20 year CD, especially since interest rates are at an all time low. Your money is stuck. For 20 years.

Ideally, you'd open a 527 for the kid and let the nest egg grow tax-free.

As I said, kind gesture, terrible investment.


Okay, no offense, but your first point's kinda stupid. The average person has no idea how to make a wise investment on the market. Let's talk about average people here, because it's obvious that the economically savvy are going to see much higher returns.

Plus, unless you are the kid's parent or a really close relative, you aren't going to be watching the market in the first place. It's more like you'd invest and hope that in 18-20 years you actually... y'know... made money.

The 20-year demand isn't really a problem for a gift, so I'm assuming we are talking about personal investments here. And it's a reasonable concern. But to be fair, if you are looking for a good return with minimal effort, then bonds aren't an awful choice.

Interest rates are at an all time low for pretty much everything, aren't they? You're still fortunate that a bond has a bi-annual rate.

And the interest on bonds is tax-free, according to the treasury website.

And I have no clue what a 527 is, but wikipedia is telling me it's a tax-exempt organization intended to fund candidates in political races.

I'm assuming you meant a 529? These are certainly a good idea (particularly because you don't need to lock up the money). And many of them get to avoid certain state/federal taxes. But they can only be used for college investment, AFAIK. You can't just make one for yourself. Many of them also have expenses built in--for instance, I'm looking at a NJ-specific one right now, and it will eat as much as 2% of what you put in. That's not a small sum, in the long run.

The nicest part of this one is that NJ ignores it when it comes to issuing state aid for education. IDK if that's universal or not. But very nice if you have a lot in it.

I can't find the interest rate on these accounts anywhere, but I'm assuming it's decent. Definitely a nice alternative, if you are looking to provide for a child. But that's all they are good for--giving a gift to others or making a personal investment is a different story.
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#15 May 06 2011 at 10:05 PM Rating: Good
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Why are you arguing with me about Treasury bonds? I've already said that they're kind gestures. Someone who is giving a kid a $100 Treasury bond is not looking to seriously invest. If I were more cynical, I'd say it's so the parents can't touch it.

If they don't know how to invest, they're going to talk to an investment advisor. If you go DIY, investing in mutual funds is really not that hard. 3-4% over thirty years is barely keeping your head up above inflation.

The rate of return on a 529 is going to vary. Returns aren't guaranteed but it's incredibly unlikely that you'll lose out over 20 years.

Edited, May 6th 2011 11:09pm by Sweetums
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#16 May 06 2011 at 10:14 PM Rating: Good
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So what would you recommend for the average person who doesn't want to be too involved, but is looking for a decent return on a moderate investment. Assume that it's fine for the funds to be locked up for 10-20 years (maybe they're just trying to be sure they'll have money to travel later in life or something), and that they'd only be investing a relatively small sum of money (maybe $500-2k).

You are free to assume that they plan to do so for several years (say... 5). You can also assume they have a 401k that they contribute to, as well.

The cost of using an investment counselor needs to be factored in, of course.

I honestly don't know enough about investment opportunities to know what would be a wise course of action. But it seems like CDs would not be the wise choice in this situation--the best 10 year one I can find requires a min investment of 2.5k and only has an APY of 3%).
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#17 May 06 2011 at 10:18 PM Rating: Good
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I was disparaging Treasury bonds by comparing them to CDs.

You can just get the brokerage to manage it for you. Vanguard (that just happens to be who I have an account with) will change the investments as your kid gets closer to college age, going to more conservative ones as they get older.



Edited, May 6th 2011 11:24pm by Sweetums
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#18 May 06 2011 at 10:24 PM Rating: Good
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Honestly, you can probably just dump money in a 529, choose a few mutual funds that look good, and leave it alone. In fact, you can probably get the brokerage to manage it for you.


I still don't know what a 529 is. D:
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#19 May 06 2011 at 10:31 PM Rating: Good
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It's a tax-deferred college savings plan. Pretty much any large brokerage will be fine, and opening an account is about as hard as opening a bank account. It takes around 10 minutes to open, then you just transfer funds over.

They'll probably have managed funds where you click on the date your kid is going to college, and then you kind of sit there. You don't really need much savvy.



Edited, May 6th 2011 11:34pm by Sweetums
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#20 May 06 2011 at 10:34 PM Rating: Good
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I'm assuming that, if the kid doesn't go to college, you actually need to pay the taxes on the cash though?
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#21 May 06 2011 at 10:38 PM Rating: Good
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You'd need to pay taxes anyway. It's tax-deferred.

If the kid doesn't go to college, you can probably change the beneficiary (this is probably just an online form). I don't know if it's just limited to one person's college expenses. You'll probably pay a penalty if you don't use it for educational expenses.

Edited, May 6th 2011 11:39pm by Sweetums
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#22 May 06 2011 at 10:38 PM Rating: Good
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I see. What kind of interest rates do these things see?
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#23 May 06 2011 at 10:39 PM Rating: Good
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Usually the rate I've seen assumed for returns from investing is ~8%
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#24 May 06 2011 at 11:36 PM Rating: Good
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Sweetums wrote:
Usually the rate I've seen assumed for returns from investing is ~8%


Average from the 70's to 10's is ~10%.

8% is by no means terrible, as the ~10% includes S&P funds.

One interesting strategy is to buy what hedge funds are buying so as to not pay the fees but that's pretty micro heavy.
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#25 May 06 2011 at 11:45 PM Rating: Good
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Eh, I don't really have enough to invest to make stocks worth it because the commission fees just eat my returns. I'm probably going to close my brokerage account so I don't have to pay the unnecessary $20/yr fee for now. I'll reopen it and play with it once I have more income.

I'll probably research other places for stock trading since there's bound to be some better deals wrt fees and commissions.

Edited, May 7th 2011 12:50am by Sweetums
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#26 May 06 2011 at 11:50 PM Rating: Excellent
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So Japan and China buy up quantities of them (and so do American citizens - lots of grandmas buy the 20 year bonds for grandchildren for college) and then the US has to pay up those bonds at the time of maturation.

This is the point missed by people who say "What if China calls in all our debt?". They can't as their pay-out is tied to the terms of the bond unless they want to lose a substantial amount of money in the process. Calling in all their debt would be akin to giving the US government a nice cash donation.
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#27 May 07 2011 at 12:25 AM Rating: Decent
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The average person has no idea how to make a wise investment on the market. Let's talk about average people here, because it's obvious that the economically savvy are going to see much higher returns.


Even black people know how to do that.

Edited, May 6th 2011 11:26pm by Kachi
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#28 May 07 2011 at 12:30 AM Rating: Decent
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THAT'S RACIST!
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