Imagine borrowing more than a trillion bucks … and paying NOTHING for the money. That’s the deal Uncle Sam is enjoying right now.
Thanks to worries about economic growth, Federal Reserve interest rate policy, falling inflation worldwide, and an incredible need among institutional investors and corporate treasurers for a safe place to park spare cash, the Treasury Department has been able to sell roughly $1.2 trillion worth of T-bills at zero percent interest.
It has done so 46 times in the past several months, at both 1-month and 3-month bill auctions. As one bond market expert at Jeffries LLC put it in the Wall Street Journal: “It is absolutely weird … but this is the world we are living in.”
The Fed always talks about the benefits of rock-bottom rates. Yet it creates market distortions like governments borrowing for free.
Not only that, but it also hits all of us in our wallets and pocketbooks. That’s because record-low government borrowing rates allow banks to pay record-low yields on our savings and money market accounts, as well as Certificates of Deposit.
So how can you fight back? My interest rate course, “How To Profit From Rising Interest Rates”, goes into great detail on ways to boost your income, using a variety of strategies.
But as a quick preview:
- Establish a CD “Ladder”
This strategy involves parking money in a range of CDs with different maturity dates, rather than putting all your funds in, say, a 1-year certificate. That allows you to pick up some additional yield, without taking on as much interest rate risk as you otherwise would.
- Take on Some Credit Risk
Don’t just buy Treasuries. Consider adding some highly-rated corporate debt, or even small amounts of higher-yielding junk and emerging market bonds to your holdings. But only do so at the right time and price … which my course can help you with. I personally designed this landmark course from the ground up to help make sure you get your share of the profits.
- Consider Alternatives to Traditional Bonds and Bank Accounts
Higher-yielding, dividend paying stocks in safer sectors like utilities or consumer staples. Rental real estate. Even peer-to-peer lending. All of these alternative strategies can help you generate more income than the pathetic yields offered on traditional bonds or bank accounts.
In other words, there are ways you can fight back. You may just need some help and guidance – which I’m happy to provide if I can.
Until next time,
P.S. To watch the first session of my course, “How To Profit From Rising Interest Rates”, totally free, click here! In this ground-breaking, seven-part course, I will show you everything you need to know about how to profit from volatile interest rates including…
- Six easy steps to making big money in bonds
- Three quick and easy ways to profit when the Fed raises rates
- Ten forecasts for interest rates and how to profit from them
- Investments that could rise 500% to 1,500% when rates rise
I will also debunk the five most common and dangerous myths about interest rates and reveal the truth that can make you richer…plus you’ll discover the six powerful forces that drive interest up or down…and how to monitor treasury auctions that can give you important clues as to when the Fed is about to act.
Mike Larson is a Senior Analyst for Weiss Research, and is also the editor of Safe Money Report and Interest Rate Speculator at Weiss. A graduate of Boston University, Mike Larson formerly worked at Bankrate.com and Bloomberg News, and is regularly featured on CNBC, CNN, Fox Business News and Bloomberg Television as well as many national radio programs. Due to the astonishing accuracy of his forecasts and warnings, Mike Larson is often quoted by the Washington Post, Chicago Tribune, Associated Press, Reuters, CNNMoney and many others.