I'd still put that in the "joke" category. You're locking up your money for six months, at 2.5%, at a time when the next year's inflation rate is projected to be about 2.3%. A tiny hiccup towards higher inflation, and you're getting negative real returns on your cash. And even if inflation keeps to expectations, you're basically locking your money up for six months with no meaningful return.
Where to invest.
- Thread starter Oneuli
- Start date
I'd still put that in the "joke" category. You're locking up your money for six months, at 2.5%, at a time when the next year's inflation rate is projected to be about 2.3%. A tiny hiccup towards higher inflation, and you're getting negative real returns on your cash. And even if inflation keeps to expectations, you're basically locking your money up for six months with no meaningful return.
The idea of their sell offs being staggered doesn't give me much confidence, because once we get to a point where more people are looking to cash out of the stock market than looking to increase their holdings, you wind up with a serious drag. I still haven't done the math more widely to see if Japan is an exceptional case, but it has me worried. The idea of going 20 years with stock values actually declining is a nightmare, even for long-term investors like me.
As for golf, I literally don't know anyone in my generation who plays. I would be very wary of being invested in golf.
Interesting, it must have something to do with the area, my sons friends all play golf. It would be interesting to see how the numbers are declining and in what areas.
Irish Exit
Verified User
My family has been in golf about as long as golf has existed so it is inescapable plus it is really hard to unload some of that private place stuff once you have it, but I agree it is more or less an extinct sport at this point.
As for long term, hard to say if you are that risk adverse. The inflation-adjusted and nominal values of the market have more or less merged since 2008 due to no inflation. I understand that the construction bond market in Europe, especially in norway, sweden, and finland has been growing and kicking out ok returns, but that is probably going to put you into the private placement situation and could tie up your money longer than you want.
Now that said, in a declining market, you may need to switch up the long term strategy. Focus on old faithfuls like P&G (though it is probably over-valued right now due to people running to it). I made an ok chunk of money just playing JCP a few years back when it was in the $5-$10 range. Wouldn't do it now that it is below a dollar, but look for companies with low share prices and some volatility, get in on the lows and wait for a climb to get out until it cycles down again. It is a strategy I learned from someone who made thousands off Value Jet stock when it was teetering on its bankruptcy even though he was caught still holding when the bankruptcy happened.
Althea
Althea told me...
As opposed to what? Where is your cash right now? 6 months is hardly 'locking up'. And it's certainly not 'negative income'.
Why are you citing inflation, if you're interested in growth as opposed to income?
Irish Exit
Verified User
It is a declining industry. Part of it has to do with the spread of semi-private, public & municipal courses so people don't feel compelled to buy memberships at private clubs. Several courses have dropped back to 9 hole courses. Part of it is that the older folks are dying off and the younger people cannot afford or do not want to be part of the country club scene. We have one club that went under a few years back, but has been re-opened but is still struggling to remain so. We have another course about to be converted into a solar farm. My brother is preparing to go in a renovate a couple courses somewhere in North Carolina that had sat closed for a few years and only recently has been purchased by some resort chain. It is an expensive thing to maintain. A no-frills course will run you at least $300K just to maintain a year. If you need a new irrigation system, you can plan on dropping at least $1M. If it is an old course and the greens need to be redone, you are looking at $100K-$1M depending on how extensive your redo is.
I hear you about country clubs, most here have public greens to help subsist the private greens.
Irish Exit
Verified User
That is a mistake golf courses make. When you become semi-private, members quit because they can still play but don't have to pay monthly dues or expensive assessments. "Why should I keep paying $300 a month year round when I can just pay to play during the summer."
The better courses and you don’t have to mingle with the commoners. I thought that was the purpose of country clubs in the first place?
Irish Exit
Verified User
Working class clubs, high end clubs--they are all struggling for the reasons stated. Maybe in warm climate golf/vacation meccas they can hang on, but in a lot of places they are under duress. Plus, people are not that interested in something that takes them 3-4 hours or more to do as a regular hobby. I mean I am a member of our local country club and I almost never use it anymore. I am not sure why I am even a member still. It is mostly a bunch of old people with one foot in the grave that I don't enjoy being around. The menus almost never change and I am over golf as sport. Plus they redid the greens and I hate the new grass. The only reason I ever joined was they waived the initiation fee and gave me a very discounted monthly rate for the first 5 years.
That's my point -- there's no clearly good place to put money right now -- no place where you can have near certainty of getting back significantly more money, in real terms, than you put in. At best, for low risk you wind up betting on a fraction of a percentage point of real gain. That wasn't always the case. There were points at which CDs, treasuries, etc., paid multiple percentage points above expected inflation.
I've got my cash sitting in a Fidelity Money Market, which is only getting 2.09%, which is effectively a money-loser after expected inflation. But, I've still decided that's better than putting it in a six-month CD, at least unless I can get over 3%. With rates more likely to rise than fall in the next six months, I think I'm likely to get a bit better than 2.1% in that period, and in the meantime I have quick access if an emergency were to hit. A fraction of a percentage point for half a year, for the amounts I'm putting away, just doesn't add up to much.
I would say "it's probably not negative income." In theory, it could be negative income, in real terms, if inflation comes in just a little higher than expected over the next six months.
Inflation needs to be accounted for if you want to know what the real return is. Just take it to the extreme to show the point. Picture, say, 1000% inflation. Well then, I'd definitely be better not to lock up my money at a low rate for 6 months, since I'd lose nearly all that value, in real terms. I'd do better, then, to buy some tangible object that holds its value in real terms, or just to put it in an account with a floating interest rate, which is likely to rise in response to inflation (or, say, a TIPS investment). Granted, we're not going to see 1000% inflation, but the concept is still there, just more subtly.
Althea
Althea told me...
Typically, there is a fee for the money market, but the interest they pay gives you a net positive. At Vanguard, they pay app. 2%, but I yield app. 1.6% after expense ratio.
Sure...we're talking minutia, but you seemed to be in a position where you weren't ready to jump into the market. As long as you're earning 'something', that's better than .1% at a savings bank.
Last two years aren't a normal baseline, but many with passive accounts in the market lost money last year. My idle money earned $1000.00
Mott the Hoople
Sweet Jane
I'd say quit all together and buy a decent bicycle. It will cost far less over the long haul, even if you buy a high end road bike, you'll get in far better shape than playing golf and you'll meet more people too. Not to mention it's a lot more fun to do.
I would probably get lynched if I said that publicly where I live which is a big time PGA Golf town. (Dublin, OH...the town that Jack built). I have to admit the thing I find most repulsive about golf, beside the cost, is the country club culture surrounding it. No thanks.
Mott the Hoople
Sweet Jane
Yup....the late great Top Spin told me that and it bailed my ass out during the 2008 crisis. I took my money market fund and invested it all in stocks and made back all the money I lost, and then some in less than a year.
Irish Exit
Verified User
I'd say quit all together and buy a decent bicycle. It will cost far less over the long haul, even if you buy a high end road bike, you'll get in far better shape than playing golf and you'll meet more people too. Not to mention it's a lot more fun to do.
I would probably get lynched if I said that publicly where I live which is a big time PGA Golf town. (Dublin, OH...the town that Jack built). I have to admit the thing I find most repulsive about golf, beside the cost, is the country club culture surrounding it. No thanks.
Bikes require like energy and shit. Golf carts you just put your fat foot on the pedal and let gravity do the rest
My club has a pool and tennis too which is really the reason I joined (the pool) as there are no public pools in my area. It has a gym as well. I saw it once when I got lost in the clubhouse. There is a rumor there may be a huge special assessment in the works. I used to be immune from them but not any more. If so, I will quit when that comes down guaranteed.