My father and mother brought me up living off a $15k a year postal pension and clipped coupons out of the paper every week for his weekly shopping trip long before “generics” became a thing. My mom absolutely refused to use any form of credit other than the mortgage note which they paid off as soon as they were able. This bit her in the long run because when my father passed she had no established credit history at all. Hopefully I fell somewhere in the middle. I thank them both for teaching me to plan for my future day 1. I was a computer programmer for around 15 years and always had at least 50% (if not more) of my salary going to maxing out my 401k, any stock purchase plans where the company would match and doing a computer repair business on the side to generate under the table income. Every time I got a raise even if just the 3% cost of living raises given to combat inflation I rolled that money into investing/emergency fund before I ever got used to the money. In 1998 I was in atlanta during the olympics working on the Year 2000 software bug as a “contract programmer” which was very lucrative at the time. In 2006 health issues forced me to leave the workforce and I could no longer contribute to IRA’s etc because I didn’t have what the IRS recognized as income (interest, dividends etc) although that sure didn’t stop them from taxing it. I would have been much worse off if I have not front loaded all that retirement money because I wasn’t allowed to contribute later and as the wonders of compounded interest and reinvesting dividends has shown each dollar you can put in during the “early years” is worth thousands later in life. I do my best not to come across as some “entitled snot” because I don’t believe this world owes us anything although I’m sure I fail at times. I’ve been told my friends can hear penny’s screaming as they try to get away from me. Heck I just finally upgraded the tv I had in the living room. I had a Mitsubishi (yes Mitsubishi) 73 inch rear projector tv purchases sometime before 2005 from dell.com. They gave me 0 percent interest to pay it off within 24 months. I replaced it with a Hisense almost lowest of the low model 70" roku tv that was on a 24 hour flash sale for $450 from best buy just this week. My credit card will pay back 5% of the purchase and extend the warranty by 1 year. I used a cashback shopping portal before going to bestbuy.com that will get me another 1% back. The first tv they delivered had no accessories (power cord, remote, screws for feet, and manual) so they had to do a 2nd delivery 4 days later with a new tv and took the old one. They gave me a $100 gift card “for the inconvenience” (it pays to be calm and patient when dealing with customer service and I suppose if the customer service lady likes your southern accent that doesn’t hurt either). I don’t think they made a profit on this purchase. That’ll be my “big purchase” for probably the next 5+ years excluding things like automobile repairs etc. I have been such a chronic saver I actually have problems making myself spend money on things like this. I hope this explains things a little better as I think I came across wrong in my previous message which was not my intent. Ok so I’m sure I overshared but I thought some background might help to explain how I’m looking at things.
Posting here to avoid starting a new thread. And certainly munis are a low risk alternative to CDs, so hope I’m on topic:
I’m an old muni guy (not for the last twenty years, though) but I failed to foresee this. Here we have one of those things where, when you first hear about it you think: OF COURSE! Why didn’t I see that coming!? But I didn’t.
Anyway, perhaps munis are not as bulletproof as once was the case, and as surely they were back in my day:
The number of low risk alternatives to CDs appears today, with the coronavirus, to be shrinking. Safety of investment alternatives, which might have appeared prudent six months ago, is now subject to question.
Clearly the safest alternatives available at this time are treasury bills, notes, and bonds, and also savings bonds. There is no doubt America will pay off such instruments, printing the money to do so if necessary. There is, unfortunately, question about the buying power of the dollars you will receive upon maturity.
Beyond those alternatives I don’t have much to offer. Famewolf put out the call months ago. There have not been a great many alternatives suggested.
ETA
Pursuant to the above, I suggest anyone looking to invest money safely consider US savings bonds, I bonds or whatever. I bought some a couple of years ago, more or less mindlessly. Finally more recently I came to my senses and stopped. The interest rate was just too uncompetitive.
But with the virus interest rates have plunged while savings bond interest rates have not reset yet as far as I’m aware. While such bonds were not competitive prior, they might be now. And there is no state tax and no Federal tax until you cash the bonds in. If you buy before the end of March they will give you interest for the entire month.
“Beyond those alternatives I don’t have much to offer. Famewolf put out the call months ago. There have not been a great many alternatives suggested.”
That’s your opinion and you came into this already trending against these methods. As @jcohen73 mentioned dividend stocks continue to pay out their consistent dividends. No loss is generated until I choose to sell or the dividend changes. If I die still holding these stocks my beneficiary gets them with a cost basis of the price they were the day I became deceased meaning they don’t have to pay capital gains.
Additionally in the past I mentioned annuities many of which had a 5-6% “guaranteed return” at the time. Those continue to pay out now and in many cases are designed to pay out until you kick the bucket AND have a death benefit equal to at LEAST what you started with. The problem is you needed to invest in those THEN as now the rates offered will be not worth the effort of tying up your funds.
Finally I mentioned peer to peer lending clubs like lendingclub.com. Even after all defaults it produced a 5-6% return on money invested. This is a LONG term investment designed to pay an income. Many people are refinancing debt at this time so it’s certainly a good time to look over the possibilities. I just read an article saying mortgages rates are the HIGHEST they’ve been in quite some time in spite of the market and lowering of interest rates in general.
Ignoring all these the very first thing anyone should be doing now while rates are so low is pay down their OWN debt. Refinance at lower rates. Consolidate if possible. Get rid of those high credit card rates. Pay down the mortgage with extra payments. If you are not retired or going to be retired within 5 years add to retirement funds as much as possible.
This thread is about income alternatives to CDs. I think the answer for retired folks, like myself, is far different that it is for much younger people. Young people have time for the stock market to recover. They also have salaries . . . at least they do in normal times.
Retirees are different. They at this point are looking back at two black swan events in the past twelve or thirteen years, both of which have hit the stock market very hard. If that alone is not sufficient lesson for most retirees, I can be of very little help.
Income is one thing. But catastrophic loss of principal is also a very big deal.
Please come back when you have been retired for more than thirty years and we can discuss this again.
I’m already well past that mark and still am well set for at least the next twenty years! So I have a different view.
Sorry. I missed where you said your mom was in stocks.
I wish you well and I hope it all works out for you. You are VERY young.
What stuff? If you mean advising retirees to choose safer investment alternatives, I disagree.
Now if you are a retiree in your 40’s and choose stocks as a safe investment alternative, I think that is different. You still have time to go back to work should that ever become necessary. But for much older retirees, well, loss of a large percentage of your principal is not a good thing at all.
Fair enough. And so am I. And we have different approaches and different answers.
No matter how many times it’s explained to you in simple english you appear unable to comprehend the concept of generating income to live off of without caring about what the principle is doing so why not stop posting here if this topic isn’t to your taste because you are doing nothing but adding confusion. A while back I posted 10 stocks I was going to invest in…I purchased $6000 of each stock. The overall value started at $60,000 and is now around $40,000. Am I concerned? No because every one is maintaining a dividend of at LEAST 3 percent with some at the 6 and 7% level. Those dividends are now buying MORE stock which means more dividends which means more stock. Rinse lather repeat. Your advice in the Cd area is usually good so you should stick to the Cd’s and banks you are comfortable with but as I recall you got burned taking your own advice just recently. No one can predict the future, just like with CD’s the best a person can do is lock in a consistant payout NOW that will continue forward.
I retired when I was 36 primarily living off income generated from dividend stocks I had purchased and held for 16 years. I still own those same stocks in addition to others. They still pay dividends. I’m pretty comfortable with my method.
Well, that is true. I do not comprehend, nor do I accept, the principle of loss of principal being in any manner acceptable or wise.
At least, as I wrote in response to jcohen73, that applies to older folks who might be seeking a safe alternative to CDs where, strangely enough, there is no such peril.
Is any investment where one’s principal is placed at serious risk a low risk alternative to investment in CDs, wherein one’s principal is generally secure?
I believe the answer to that is self-evidently “no”, an answer which is intuitively obvious even to a casual observer.
Well, it’s important always to post on topic. The topic here is “Low Risk Income Alternatives”.
In my view, by posting here about stocks, you are off topic . . . . . . . by definition.
Youve stated your opinion in this thread multiple times on multiple days. The solution is simple. Don’t post here. As I recall it was YOUR post 3 hours ago that started all this. I don’t recall going to YOUR thread and trash talking.
Last I checked I created this thread and stock is in the damn title so I don’t think your view matters HERE.
Agreed, famewolf. You got me there. I missed the inherent conflict and contradiction in your thread title. You are stating, implicitly, that stocks can be low risk. That’s pretty funny.
But it’s your thread and your title. I concede the point about posting off topic.
Am I going to have to ask the forum owner to block you from this thread?
If Warren considers me a fool I wear that as a badge of honor. Ask the old boy how his stocks are holding up today.
And BTW, I just read a WSJ piece saying we are FAR from the bottom. As a retiree, I cannot afford to follow Warren’s counsel. It could become quite expensive to do so.
I dunno. Am I disallowed, under your rules, from responding to being labelled a fool? If so, then you had better block me.
Better to Remain Silent and Be Thought a Fool than to Speak and Remove All Doubt
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