"Yield Curve of Short and Long Term Interest Rates"
Don't envy me -- Join me!
This site contains the pieces of the income investing jigsaw puzzle -- now get the Big Picture so you secure your financial future by creating an ever-growing income from investing
What is a Yield Curve.
You always knew that money had time value, and now you know that this is important in income investing.
And you know that money in the near future is worth more than money in the far future.
But how much more?
That depends upon interest rates.
Economists keep track of what's called the yield curve
That is what the graph of interest rates looks like.
The vertical line is interest rates running from 0% on up.
The horizontal line is time periods from 90 days to 30 years.
You make the curve by plotting the interest rates for Treasury securities
90 day Treasuries will pay the lowest interest.
30 year Treasury bonds will pay the highest interest.
Sometimes the economy gives money in the present far less than other times.
Usually, it's quite clear that long term money pays a higher interest than short term money
Other times, the yield curve goes close to flat.
When you can make almost as high a yield by investing in a 90 day Treasury as you can in a 30 year Treasury bond, that means that currently interest rates are very high. You'd be foolish to tie up your money in a 30 year bond when you can get almost as much money over the next 90 days.
Sometimes the yield curve is actually inverted -- you can get a higher rate of interest in the short term than the long term.
That's generally considered bad for the economy and the stock market, since it reflects that people have a lot of fear in the present. They are so fearful of risk in the present that they're not even thinking about investing long term.
The yield curve is probably not something you'll want to pay attention to every day. However, it does affect fixed income investing because they are so dependent upon current prevailing interest rates.
You won't pay attention to the yield curve, but it will affect your pocket book, for better or worse.
Click to watch brief (30 second), exciting video on finding financial freedom through investing for income . . .
Now experience for yourself the joy of securing your retirement through income investing!
Want more income -- now or when you retire? Get your free eCourse:
Learn the Secrets of Investors Who Make Money in Both Bull and Bear Markets . . . Good Times and Bad!
Before the subprime mortgage mess makes stock market goes down more . . . before the stock market goes up, making dividend paying stocks more expensive . . . before the rising cost of gas, gold and food -- and the sinking U.S. dollar -- put the world into a recession . . . before retiring baby boomers start selling off their growth stocks . . . before you need investment income just to eat!
7 Reasons to Invest for Income -- NOW More Than Ever
Rick Stooker
- The greatest secret to income investing (Einstein called it "The most powerful force in the universe")
- What -- historically -- gives stock market investors 1/2 of their total returns (from 1929-1954; 1966-1981; and 1999-mid-2008 it was the ONLY way to make money from the stock market!)
- How to avoid suffering from accounting fraud. Automatically keeps you from throwing you money away on future Enrons, Tycos, and WorldComs
It's easy. Just enter your first name and email address into the form below.
(NOTE: I greatly respect your privacy. I will never sell, rent, share or give away your email address to anyone. There is no obligation. You can unsubscribe at any time. After you click the button, you'll be taken to a page to thank you.)
Or, you can subscribe to the 7 Reasons to Invest for Income Now More Than Ever RSS feed. Just click on the orange RSS feed icon below:
Disclaimer:
I am not a financial advisor. I am not a broker. I am not a financial planner.
I have no professional licenses.
I am a wide reader and an independent thinker and this site gives my opinions on the subject of income investing.
Nothing in this site is to be construed as professional advice.
I am not responsible for the results of your investment decisions.
Past results are no guarantee of future returns.
You must read, think over what I say, make your own investment decisions and take responsibility for your own life, including the results of your investment decisions.
Continuing to stay on this site implies your acceptance of these terms.
Income Investing Site Full Website Agreement
Subscribe now to the Fixed Income Investing RSS feed:
