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Author Topic: Savings account vs Treasury bills  (Read 2649 times)
alkor
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December 24, 2010, 06:53:44 AM
 #1

Hello,

I would like to get some advice on where to keep my savings. I currently have all my savings in a credit union which has an APY of 1.11%, which as far as I know is even lower than the inflation rate itself.

So, I decided to open an account at
     http://www.treasurydirect.gov/
and now I am considering what percentage of my savings should I move there.

What would be the equivalent APY that the treasury bills will yield? Will they compensate for inflation?

Thanks!
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kiba
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December 24, 2010, 07:02:03 AM
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The economic forum is not your financial help forum.

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December 24, 2010, 07:15:30 AM
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In my country we say: "Ir de Guatemala a Guatepeor", which means something like jumping from the frying pan to the fire.

In reality you are going from dollars to dollar debt so its not really a change what you are proposing. Treasuries are a bubble and a losing investment. You should look for other options.
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December 24, 2010, 07:17:20 AM
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The economic forum is not your financial help forum.

it is if people want to answer. Smiley

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December 24, 2010, 07:33:50 AM
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you should put all your savings into bitcoin.  Grin

One off NP-Hard.
alkor
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December 24, 2010, 07:43:39 AM
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In my country we say: "Ir de Guatemala a Guatepeor", which means something like jumping from the frying pan to the fire.

In reality you are going from dollars to dollar debt so its not really a change what you are proposing. Treasuries are a bubble and a losing investment. You should look for other options.

Are you from Guatemala?

I could also buy gold, but since I don't have millions, I don't want to have to deal with the question of storing it and trusting a third party to do that safely for me.
I think putting money in treasuries is the safest bet. The US government is unlikely to default with all the military power backing it - it's always going to find a way to get money.

alkor
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December 24, 2010, 07:49:05 AM
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you should put all your savings into bitcoin.  Grin

And then when something hacks into my computer and steals my wallet.dat, or by computer's hard drive accidentally fries, I will lose all my life savings Smiley

I am planning to diversify some of my savings with bitcoins though. 
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December 24, 2010, 08:05:38 AM
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Hold dollars at your moral and financial risk!


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hugolp
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December 24, 2010, 09:36:14 AM
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In my country we say: "Ir de Guatemala a Guatepeor", which means something like jumping from the frying pan to the fire.

In reality you are going from dollars to dollar debt so its not really a change what you are proposing. Treasuries are a bubble and a losing investment. You should look for other options.

Are you from Guatemala?

I could also buy gold, but since I don't have millions, I don't want to have to deal with the question of storing it and trusting a third party to do that safely for me.
I think putting money in treasuries is the safest bet. The US government is unlikely to default with all the military power backing it - it's always going to find a way to get money.



There is this thing called supply and demand. The supply of dollars is booming (to avoid direct default), and that means its price is going to go down, if you know what I mean. Going into treasuries now is crazy.

The USA will not oficially default, it will print its way out, which is a hidden default.

PS: I find it kind of amusing discussing with people that I highly suspect they are trolls. Its weird.
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December 24, 2010, 10:04:38 AM
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I think putting money in treasuries is the safest bet. The US government is unlikely to default with all the military power backing it - it's always going to find a way to get money.
Huh, that's a very strange and faulty argument. With military power backing you it's actually easier to default. You can simply raise the finger at people that want their money back, and there's nothing they can do about it.

Also, it's certainly not been proven that war actually 'yields' more than it costs, especially a war of attrition such as the current ones.

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December 24, 2010, 10:52:57 AM
 #11

Are you from Guatemala?

I doubt that in Guatemala itself they would use the saying "to go from Guatebad to Guateworse". Unless they have a very self deprecating kind of culture, which Latin American countries don't tend to have.

Most likely he is from a neighbouring country.

Seriously though, US Treasuary bills are definitely a Guatemalinvestment.

You are probably even safer buying Guatemalan government bonds.  Smiley

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Timo Y
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December 24, 2010, 10:54:48 AM
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And then when something hacks into my computer and steals my wallet.dat, or by computer's hard drive accidentally fries, I will lose all my life savings Smiley

Not if you take the right precautions:

https://en.bitcoin.it/wiki/Securing_your_wallet

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December 24, 2010, 04:03:12 PM
 #13

So, I decided to open an account at
     http://www.treasurydirect.gov/
and now I am considering what percentage of my savings should I move there.

What would be the equivalent APY that the treasury bills will yield? Will they compensate for inflation?

TIPS (Treasury Inflation Protected Securities), which are sold by treasurydirect, compensate for inflation.  They are a good place to put money that you're pretty sure you will need "soon" -- within the next 5 years or so.  Assuming you trust the US government not to default on its debt (I do-- I think the government might try to inflate away the debt, but won't outright default).

Money you won't need soon aught to be invested in something productive-- invest in some business or person that is making our lives more efficient or pleasant.  That should give you the best long-term return and will make the world a better place, too.  Stock market index funds are an inexpensive, mostly safe, mostly inflation-proof way to invest.

If you have some 'playing around' money that you can afford to lose, you might want to invest in Bitcoins.  But bitcoin is a startup currency, and should be treated like a high-tech startup company-- high-risk, but very high potential reward.  You might lose your entire investment or it might turn out to be the best investment you ever made.

How often do you get the chance to work on a potentially world-changing project?
alkor
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December 24, 2010, 06:43:24 PM
 #14

There is this thing called supply and demand. The supply of dollars is booming (to avoid direct default), and that means its price is going to go down, if you know what I mean. Going into treasuries now is crazy.

On the other hand the dollar is perceived as a safe haven by the rest of the world, especially in times of crisis, so the demand for dollars is growing as well. It is true that the Federal Reserve has increased the money supply dramatically, but the rest of the world acts like a sponge that absorbs the newly created dollars pretty well.
hugolp
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December 25, 2010, 02:03:34 PM
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On the other hand the dollar is perceived as a safe haven by the rest of the world, especially in times of crisis, so the demand for dollars is growing as well. It is true that the Federal Reserve has increased the money supply dramatically, but the rest of the world acts like a sponge that absorbs the newly created dollars pretty well.

Not really a safe haven. You got it right the first time when you said that the dollar is protected by the biggest army in the world. That is the reason why the dollar has not collapsed, despite all the monetary abuses by the USA government. If the rest of the countries could freely choose the dollar would be toast. But the reality is they dont.

The problem is there is no way the rest of the world can eat up what the USA government is about to do to inflate is debt. The Federal Reserve just passed the 1 trillion mark in treasuries last week, and its going to keep going. QE1, QE2, Bernanke has already hinted at QE3 and QE4 will follow (even if Bernanke does not call it that way, the Fed is going to be monetizing gov debt for years).

Treasuries are a loosing investment right now. They are coming from record low yields. They are now raising and can only keep raising.

TIPS (Treasury Inflation Protected Securities), which are sold by treasurydirect, compensate for inflation.  They are a good place to put money that you're pretty sure you will need "soon" -- within the next 5 years or so.

TIPS follow CPI, which is a government indicator. Watch out with that.
Cryptoman
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December 25, 2010, 07:06:18 PM
 #16

You should consider Treasuries a Ponzi scheme.  Invest with caution and be prepared to get out at the first sign of trouble.

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December 25, 2010, 11:46:23 PM
 #17

In my country we say: "Ir de Guatemala a Guatepeor", which means something like jumping from the frying pan to the fire.

Wink
In my country we have "Z deszczu pod rynnę", which means roughly the same.


In reality you are going from dollars to dollar debt so its not really a change what you are proposing. Treasuries are a bubble and a losing investment. You should look for other options.

To topic author: What hugolp is saying is right. Stay away from both these options.... it is far from safe investment.

Save money by buying silver, platinum and land. Currencies, bonds, treasury bills are bad investments, thinking long-term.

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December 25, 2010, 11:48:01 PM
 #18

There is this thing called supply and demand. The supply of dollars is booming (to avoid direct default), and that means its price is going to go down, if you know what I mean. Going into treasuries now is crazy.
On the other hand the dollar is perceived as a safe haven by the rest of the world, especially in times of crisis,

Dollar ? Safe haven ? What cave did you just came out from ?
When the **real** financial crisis comes, dollar will be the first to fall.

Actually, destruction of dollar will be one of the first signs of collapse.

EDIT:
Dollar may be collapsing right now, as Chineese have started selling their reserves.

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