Don't be sucker punched by lower rates -

Boy interest rates have fallen off the table!  The European, Wall Street, Sovereign debt, fiscal budget, (place your crisis here), and stimulus programs (QE1, QE2, etc.) have created a free fall in interest rates.

The fed’s goal is to lower rates to a point where you and I find risky investments attractive again. At the same time American banks are supposed to start offering more credit to help build our businesses. But there’s another reason the federal government keeps lowering rates – Financial Repression. It’s a game being played with America’s nest eggs.

Americans that did the “right thing” by building a nest egg, no longer can live off of the interest in their savings accounts. The low interest rates force Americans to transfer funds from interest bearing accounts like bank CD’s, treasuries and fixed annuities, into risky investments like mutual funds, real estate and commodities.

Crazy right? Well this bird has never flown over the coo-coo’s nest so I’ll give it to you straight! Ask yourself, should you really choose risk over safety just because rates drop? What happens when the bubble bursts on your mutual fund or real estate? Should you wait for a government bail out? If you answered yes to the last question, well that egg has hatched. Don’t expect Uncle Sam to come to your rescue.

Keep your guaranteed nest egg in safe investments. Don’t get fooled. Risk doesn’t go away, it’s just pushed down the road until a bubble inflates. Then kaboom! Goodbye nest egg.

Instead of being rewarded, we’ve been hit by a truck called “low rates.” The American saver, like you, did the right thing by building a nest egg in this age of debt and greed.

Pay It Forward:

Have your sons and daughters invest monthly in low fee mutual funds or exchange-traded mutual funds.  Don’t worry about the amount, let’s just start by investing on a disciplined basis.  The first rule of investing is starting the process.

Earl E Bird

I'm Earl E. Bird and I am very concerned about saving for my senior years. I am amazed at the stumbling blocks that exist when saving for retirement. That's why I take my time when making decisions on building my nest egg.

More Posts - Website - Twitter