Anybody Buying Yet? Where’s the Bottom?

[antelopedundee]

Yes, it is sad that more young people don't know how valuable compounding interest is. No one handles their earnings perfectly. Life can throw hurdles at you. Life has been kind to me.

A money market fund by its nature is compounded since dividends are earned monthly and paid monthly. Of course rates will vary too. Drop them down to 1% and you might not do to well. I would ask if there are funds where interest is earned daily and paid daily? When earned interest is paid is the biggest factor in compounding. MM rates are tied to the prime rate and not inflation so if inflation exceeds the interest rate over time one might lose money. I think in the long haul it will likely be a wash. I personally hope they keep rates high. Selfish, but high rates benefit me more than they hurt me. I don't "borrow" money except for when I use my CC.

A good discussion of compounding.

What's Better for Your Savings: Interest Compounded Daily vs Monthly?

Daily vs. monthly compounding: Learn how compounding frequency impacts your savings and which option helps your money grow faster.

www.moneyrates.com

 

[Bonasababy]

IIRC my wife's pension's COLA is based on how well the pension fund did in the prior year.

If true, thats a bad plan unless the pension is already more than fully funded.

If that term, what it means, and where the fund is in regard isnt made clear by the folks running the pension I would be even more worried.

 

[antelopedundee]

If true, thats a bad plan unless the pension is already more than fully funded.

If that term, what it means, and where the fund is in regard isnt made clear by the folks running the pension I would be even more worried.

I used the term COLA tho I can't be sure that her former employer refers to it the same way. It's not a great amount of money and the the amount of annual increase is relatively small and nothing to get excited about.

 

[Bonasababy]

I used the term COLA tho I can't be sure that her former employer refers to it the same way. It's not a great amount of money and the the amount of annual increase is relatively small and nothing to get excited about.

Sounds a lot like a REIT i inherited a portion of. Each year returns were increased slighltly, no matter if the market soared for the product (rental/lease of building space). Did ok but I eventually started wondering what the managers take was , sold out, and invested the proceeds in funds. Some of them in muni bond funds if I remember right. In those days they did pretty well.

Pensions should be managed differently though. They get a bad rap from some due to poor...sometimes criminal...mismanagement by bad managers..

 

[antelopedundee]

Sounds a lot like a REIT i inherited a portion of. Each year returns were increased slighltly, no matter if the market soared for the product (rental/lease of building space). Did ok but I eventually started wondering what the managers take was , sold out, and invested the proceeds in funds. Some of them in muni bond funds if I remember right. In those days they did pretty well.

Pensions should be managed differently though. They get a bad rap from some due to poor...sometimes criminal...mismanagement by bad managers..

They are a life insurance company that also offers mutual funds. I believe that the pension contributions were simply combined into a separate fund and invested accordingly. It's a fairly small amount of money and not worth getting excited about.