"100% of people who do not save money do not have any!"--Dave Ramsey

[Xist]

The smurf house sold for $65,000 on 6/5/2020, fixed up, and posted for $215,000 on 7/12/2021, and finally sold for $175,800 on 4/5/2022, a whopping $338 per square foot.

I haven't calculated the average price per square feet in a few years, but I haven't seen a good house for sale in over a year.

I checked the other day and there were only 9 houses for sale for $400,000 or less and I tried to buy a nice 3-bedroom, 2-bath house for $185,000--2 years ago.

[Drifter]

A few years ago almost the entire town of Paradise, CA burned to the ground. For the next two years you could find bare/remediated lots for as low as $3,000 so I looked into building a ~1500 square foot home and was quoted $600,000 ($4/sqft). A 1,000 square foot home would have been $500,000 to build ($5/sqft).

Show Low reminded me of Paradise when I drove through it...

[Piotrsko]

Originally Posted by Drifter

Show Low reminded me of Paradise when I drove through it...

Hmm. That statement works in a multitude of ways. Been to Paradise before the fire, lived in nicer ghettos.

[JSH]

US Series I Savings Bonds are paying 9.68% at the moment. I forgot about savings bonds as the rates have been so low for so long. However they are the best guaranteed investment at the moment

[redpoint5]

Originally Posted by JSH

US Series I Savings Bonds are paying 9.68% at the moment. I forgot about savings bonds as the rates have been so low for so long. However they are the best guaranteed investment at the moment

Do those have a guaranteed fixed rate, or does it adjust over time? Don't they have to reach maturation to cash out, or you forfeit the interest?

[freebeard]

Hmm. That statement works in a multitude of ways. Been to Paradise before the fire, lived in nicer ghettos.

Antifa accelerationists worked faster than Mr. Peabody's coal train.

en.wikipedia.org/wiki/2020_Oregon_wildfires#Rumors_and_theories

Johnny Cash - Paradise

[JSH]

Originally Posted by redpoint5

Do those have a guaranteed fixed rate, or does it adjust over time? Don't they have to reach maturation to cash out, or you forfeit the interest?

They have a blended rate There is a fixed rate set at the time the bond is purchased. Right now it is 0%. There is also a variable rate based on the CPI that adjusts every 6 months. Right now that is 9.62%

They are 30 year bonds You can't cash them in for 1 year. From 1 year to 5 years you lose 3 months interest. After 5 years there is no penalty

[redpoint5]

Hmm, so if we assume high inflation for the next 5 years, it would hedge against it.

That said, my preferred hedge against inflation is fixed rate low interest debt (fixed rate mortgage).

Bonds aren't liquid enough for my taste, and historically underperform the stock market.

[JSH]

Originally Posted by redpoint5

Hmm, so if we assume high inflation for the next 5 years, it would hedge against it.

That said, my preferred hedge against inflation is fixed rate low interest debt (fixed rate mortgage).

Bonds aren't liquid enough for my taste, and historically underperform the stock market.

If you bought I Bounds today you would be guaranteed to never lose or gain money compared to the CPI. They will pay that inflation rate. Not a place to put investment money. They would have been a very good place to put emergency fund money over the last year or so. Money that you need immediately and needs to be there regardless of the current market.

Savings bounds can be bought and sold instantly online.

[Drifter]

Originally Posted by redpoint5

Hmm, so if we assume high inflation for the next 5 years, it would hedge against it.

Originally Posted by JSH

If you bought I Bounds today you would be guaranteed to never lose or gain money compared to the CPI. They will pay that inflation rate.

The key "word" in that guarantee is CPI which has historically been a pretty decent proxy for inflation, but may not be so in the future.

The consumer price index used to measure changes in the price of a fixed basket of goods, but congress allowed it to become decoupled. There were some legitimate reasons for this - manufactured products generally become better over time so comparing the price of a 1965 Ford Mustang to a 2022 Ford Mustang may not be fair. And often the products people use change over time (no one had televisions or cell phones 100 years ago).

But in giving the government the power to make quality corrections and substitutions, we've also given them the power to game the numbers. So far they haven't done too much of this, but a bureaucrat under pressure to keep inflation below X could, for example, decide that legumes could be substituted in times of rising beef/pork/poultry prices since they also have protein. Or they could say that even though the cost of medical care doubled, with all the medical advancements you are receiving twice as good of care.

Again, they haven't gamed the numbers (much) yet, but they could. For now the biggest complaint is that CPI tends to lag behind inflation a bit.

Originally Posted by redpoint5

That said, my preferred hedge against inflation is fixed rate low interest debt (fixed rate mortgage).

Mine too.

Originally Posted by redpoint5

Bonds ... historically underperform the stock market.

While they usually underperform, bonds have sometimes outperformed the stock market over 10 year periods in the past:

May 1928-May 1938
Annualized S&P 500 Return (Dividends Reinvested) 0.368%
Annualized 10 Year Treasury Return 5.442%


May 1972-May 1982
Annualized S&P 500 Return (Dividends Reinvested) -3.090%
Annualized 10 Year Treasury Return -0.556%


And those are 10 year treasuries - corporate bonds did even better...

May 2000-May 2010
Annualized S&P 500 Return (Dividends Reinvested) -2.859%
Annualized 10 Year Treasury Return 2.397%