Page 70 - Ready Set Retire
P. 70
Stephen J. Kelley
Figure 10: Prime Rate History 1930-2013
On the above historical prime rate chart note that the prime
interest rate is lower now than it has been since 1953. That’s
over 60 years! Longer than many of us have been alive. And
it’s being held at this low rate by the Federal Reserve, which is
buying up $85 billion (with a B!) worth of our debt per month.
Now, ask yourself. What happens when the Fed stops buying
the debt? Are interest rates going to go up? Are bonds going
to crash? And if they do...if $100 trillion suddenly takes a
nosedive, what happens to the rest of the economy? What
happens to your stock holdings? Do you want to find out?
Myth #3: Target Funds are the Answer
Target Date Funds (TDF) are one of the most misunderstood,
and in my opinion, most questionable investment schemes
available. The notion behind them is as you get older and closer
to retirement your asset mix should become more conservative
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