I'm thinking that if high inflation realizes, then bond ETF's aren't a great investment.
And because I see a global bear market, stock ETF's aren't a great investment either.
I also believe that the bear market will start at least a few months before inflation starts consistently beating targets.
Please tell me, based on this dim prognosis, what ETF's I should go for? The objective would be to time the market, and most likely go 100% into stocks after they've fallen to 2017 prices.
I'm looking to understand the real or effective rate of fixed rate borrowing in an inflationary environment. Is there an online calculator for this? Thank you for your help.
Obviously dependent on different lenders, loan amounts, credit scores, etc. But it feels inefficient to keep pinging my lender to check. FTHB here, just looking to stay on top of things.
Hi all -
I'm having a difficult time figuring out what parts 2 and 3 of this 3-part question is asking. Question is below:
Ms. C's godmother just left her an inheritance of $100,000: Ms. C will receive a payment of $100,000 when she turns 21, which will be in 8 years. Here is a Diagram:
| 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | |
|---|---|---|---|---|---|---|---|---|
| Nominal CF | 100,000 |
The nominal interest rate is 4% per year, and the inflation rate is expected to be 1% per year.
Part A. Calculate the present value of Cindy’s inheritance using nominal cash flows.
Part B*. Draw a diagram of the real cash flow corresponding to Cindy’s inheritance*
Part C. Calculate the present value of Cindy’s inheritance using real cash flows.
I know how to answer Part A - I just take the PV of $100k. PV = 100,000/(1.04)^8 = $73,069.02. But I don't know what they're looking for with the diagram of the real cash flow corresponding to Cindy's inheritance.
And I THINK I know how to answer Part C. First I need to find the Real Interest rate, which is (1 + real interest rate) = (1 + nominal rate) / (1+ inflation rate) = 1.04/1.01 = 1.0297-1 = .0297
Then I need to calculate the PV of $100k using the real interest rate of $100,000/(1.0297)^8 = 79,125.10
Does this sound right for Part A and Part C? And does anyone have any idea what the diagram could be for part B? I've been reviewing my notes and the video lectures but they don't have any similar type of diagram for me to use as an example.
Thanks in advance for any help!
Someone told me, if I sell the house ealy, let say10 years after I purchase, I actually pay substantially higher interest rate than the promised rate? If so, is there a way to calculate this? I know I need to pay panelty for ending the contract early, but never heard the implied interest rate would be higher? Due to higher remaining principle during the early years.. Could someone explain this?
How did real estate perform in the 70s and 80s in real terms for example?
What are ya’ll interest rates looking like and include your location for sure! I’m trying to figure out if 3.37% is a good interest rate or not.
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Before I use a bit of time and go through some trouble to code up something that grabs data from multiple sources, does anyone know of a great way/place to obtain the 'real interest rates' for those countries involved in the major pairs? Never a good idea to reinvent the wheel if you do not have to...
'Real' meaning adjusted interest rates with inflation. From what I can tell, one can find the interest rates via 10YR notes on e.g. tradingview, and then inflation rates can be found on a variety of websites. But is there any source out there that has a running chart of these? I don't want to have to consistently update some side calculation, but perhaps I will have to do some coding. Anyone have any ideas? If I need to be more specific let me know, but my intuition tells me this should information should be out there and easily accessible if it does drive a decent amount of the price action. I'm just not seeing a clear collection of this information so that I can compare for the major pairs....
Everyone seems preoccupied with the Fed raising interest rates. "Rate hikes will slow the economy and kill the equities bull market" they say.
But here's the thing: the level of interest rates doesn't matter. The level of REAL (inflation-adjusted) interest rates is more important. Real rates are still too low to hurt the economy and stocks
https://bullmarkets.co/study-bear-markets-dont-start-when-rates-are-low/
Since both stock AND bond funds seem to suffer from rising rates, I am wondering what to do with my IRA money. I have read several sources that seem to recommend real-estate related investments. I don't understand this, I would think that higher rates would discourage borrowing and therefore real estate purchases. Am I thinking about this wrong?
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Bests!
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