My goal for retirement was never to play golf, or watch TV. It was to do stuff that really matters: concentrate more energy on public policy, history and teaching. But that stuff doesn't pay (unless you are doing it for the left). I am beginning to think that I just need to invest in municipal bonds at current miserable interest rates (typically about 4.8 to 5.1%, unless you want to get risky with Puerto Rican munis), and enjoy life a bit more now, in the hopes of perhaps retiring in another couple of years.
I am hoping that there is something that I have missed: some investment that is relatively low risk, relatively low volatility on income stream, and pays net taxes about 6% or better. Any suggestions?
UPDATE: This article suggests that the dominance of a couple of really big bond firms may cause dramatic collapses in bond prices when the bond rally comes to an end -- really soon:
The biggest funds’ dominance may make it harder for everyone to sell when the Fed boosts borrowing costs from record lows and sends bond prices tumbling. In essence, their selling may crowd narrowed exits, making it more painful as all investors race to get out of a falling market.Of course, rapidly collapsing bond prices means dramatically rising bond yields. Maybe that would be a good time to be buying.
UPDATE 2: A friend who made a few hundred million some years ago tells me that if the fat cats have a secret on this, they aren't sharing it with him. He is surprised at how long interest rates have stayed low.
UPDATE 3: My 0.01% friend used the term "fat cats" to describe the people upslope from him economically -- the billionaires. This is a reminder that "fat cat" is a very relative term.
I should mention that the 4.8% - 5.1% yields that I was discussing are:
1. Municipal bonds -- not bond funds. You buy them, and if worst comes to worst, you hold them to maturity.
2. They are generally long-maturity bonds that are callable before maturity. There is usually a significant yield bonus with callable bonds, because it is likely that they will be called before maturity. If they get called in five to seven years, instead of maturing, big deal: you have earned a better return in the meantime, and it is hard to imagine the economy is going to be dramatically worse off five to seven years from now, unless we are in Mad Max territory. (That could happen.) Just make sure that if you buy callable bonds that you look not just at the yield to maturity, but the yield to worst. If you buy a bond above par, and it gets called at par two years from now, you may have a disappointing return -- potentially even negative.