OT - Money / Investing Thread (aka financial no stupid questions)

[847badgerfan]

California is on shaky ground. 

You don't get a warning.

[Cincydawg]

My area of interest in CA would be the slopes of the Sierra, not many quakes there.  I really liked the area when we visited.  Housing values were not insane.  Not many tourists.  

[Cincydawg]

One thing about options of course is how fast they can swing from worthless to worth a lot to worthless.  ABBV has "tanked" after going into the money strongly, which I guess is good for me.  Sorta.  

The other weird thing to me is some company will miss earnings by 1% and the stock tanks 8%.  

I may buy back those options today, and maybe buy another Call myself as a bet.

[betarhoalphadelta]

Another "no stupid questions" question...

The money that I park for capital gains estimated tax payments from stock sales goes into SGOV. It's a safe short-term vehicle offering ~4% annual yield based on 0-3 month treasuries. 

Without getting into politics / the Fed, I see a lot of stories this week about the Fed holding rates steady, suggesting that they're not serious enough about inflation, and that we're seeing "bonds sell off" and "yields rise". 

What does this actually mean? 

My gut reaction is that bonds "selling off" means investors don't want bonds at the current interest rates, so "yields rise" because bond issuers need to increase the interest rate yield to find buyers. Is that right? 

And the corresponding result, *should* mean that my yield on SGOV should rise?

[Cincydawg]

Your 0-3 month yield may rise, but not much.  The value of short term Treasuries is they don't change up or down much at all.  And you have about 6 weeks before there is much turnover.  90 day Treasuries have ranged between 3.6% and 3.9% YTD, currently about 3.8%.

I park funds with TFLO, which is "inflation protected treasuries".  Current yield is 3.8%.  

[betarhoalphadelta]

Gotcha. So in theory my understanding is correct, but in practice it won't affect much at least for my own funds parked in SGOV. 

Makes sense. 

I honestly don't worry about the yield here much, since it's funds that won't sit in there more than about a quarter before I have to sell and pay the taxes. But it's better than holding cash. 

[Cincydawg]

It's kinda the same as a money market fund in effect.  The few dollars extra you earn are not worth much bother IMHO.  There are short term municipal bond funds if your tax bill is onerous.

Meanwhile, going further out doesn't bring much in either because the yield curve is almost flat, 0.45%.

[Cincydawg]

The headline stated interest rates SURGED ...

The yield on the benchmark 10-year Treasury note — used to price mortgages, auto loans and credit card debt — jumped almost 7 basis points, to 4.731%. The 2-year Treasury note yield rose 6.6 basis points to 4.295% while the 30-year Treasury bond yield surged 5.6 basis points to 5.263%.

[betarhoalphadelta]

It's kinda the same as a money market fund in effect.  The few dollars extra you earn are not worth much bother IMHO.  There are short term municipal bond funds if your tax bill is onerous.

Meanwhile, going further out doesn't bring much in either because the yield curve is almost flat, 0.45%.

Yeah, the question was less around short-term, but more about the mechanism. 

A "bond sell off" and "higher yields" seems counterintuitive, because usually lowering demand means lower price. 

But if a "bond sell off" means that bond issuers have to increase yield to attract bond buyers, then it makes sense...

[847badgerfan]

I put my set-aside IRS money in a 5.6% money market that our credit union offers.

Slightly above inflation and I know it's there when it comes time.

I also pay an extra $500 for taxes out of each paycheck I get. I should probably not do that, but it makes things a little easier on me and it keeps me from having to file quarterly.

[betarhoalphadelta]

I also pay an extra $500 for taxes out of each paycheck I get. I should probably not do that, but it makes things a little easier on me and it keeps me from having to file quarterly.

I can't imagine why you shouldn't do that... They're going to get it either way, so automatically withholding rather than paying quarterly seems like a fair tradeoff that makes your life simpler. 

I have to file quarterly this year. If I tried to take it out of my paycheck, I'd have no paycheck left!

[847badgerfan]

I still set aside money on top of that, in the MM account.

My accountant advises I pay quarterly. They always have.

I don't listen and have never been penalized.

[Wildcat4E]

I can't imagine why you shouldn't do that... They're going to get it either way, so automatically withholding rather than paying quarterly seems like a fair tradeoff that makes your life simpler.

I have to file quarterly this year. If I tried to take it out of my paycheck, I'd have no paycheck left!

When I get appointed King, I shall proclaim that there will be no more automatic withholding.

People don't realize how much in taxes they truly pay when just get a check after all the withholdings, and are ecstatic when they get a "refund" of their own overpayment.

[betarhoalphadelta]

When I get appointed King, I shall proclaim that there will be no more automatic withholding.

People don't realize how much in taxes they truly pay when just get a check after all the withholdings, and are ecstatic when they get a "refund" of their own overpayment.

I 100% agree...

...and I'm not going to say anything more because that can't be done while avoiding politics