Did you think a 6.5% mortgage rate was high? How would you like a 1981 18.5% mortgage rate?
You can bet those 1981 Paul Volcker (Treasury Secretary) induced interest rates prevented the housing bubble created by the 2001-2005 monetary policy.
This chart is for all those not old enough to experience truly high interest rates and those who forgot how we earned 9-12% risk free in our Bank CD's back in 1981. Back then it paid to take no investment risk.
Today there is around $3.5 trillion dollars inside mutual fund MMFs earning just a speck more than zero (1/4%). Today is the inverse of 1981. The savers are subsidizing consumer spending, business borrowing and the big federal government bail-outs for the financial industry.
So, if you happen to be in this boat, go find yourself a good dividend paying mutual fund or portfolio of high quality dividend paying stocks in different industries. Stocks like Lilly (LLY) or Verizon (VZ) which both pay 6% yields and give you the possibility of appreciation. Neither of these two stocks have not participated in the markets 55% because they were considered defensive stocks by money managers.
Here are some recent articles on dividend paying stocks worth reading.
Dividend stocks for low excitement, high returns
The World's Best Dividend Stocks
Seeking Alpha dividend stock articles
disclosure: On 9/23/09 I invested in Lilly and Verizon.
No comments:
Post a Comment