Are Low Interest Rates a Solution or a Problem?

By 2 Cents on October 21st, 2011 | Category: Economics | 21 comments
pocket-change

Even nectar is poison if taken to excess.

~Hindu Proverb

If low interest rates are good for the economy, it should be booming by now. After all, rates have basically been falling for 30 years. Over the last 10 years or so, short term rates have been held low by central banks. Just a few weeks ago, the U.S. Federal Reserve announced Operation Twist, which will keep rates at the longer end of the curve low as well.

Yay. Soon we’ll all be basking in the glow of a red hot global economy. So why does it sound like so many governments and pundits are preparing for perdition rather than prosperity? Why isn’t the low interest rate elixir working its magic?

10 Reasons Low Interest Rates Aren’t Helping – And May Be Hurting

Lower rates are supposed to stimulate the economy by encouraging business investment, home [...]

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Category: Economics | Tags: , , , |

Variable Returns Can Work Against You in Retirement

By 2 Cents on August 11th, 2010 | Category: Retirement | 4 comments

The following is a guest post by Jim Yih, a fee-only advisor, best-selling author, financial expert, and syndicated columnist. Currently, Jim specializes in putting financial education programs into the workplace. For more information you can visit his websites at Retire Happy or Wealth Web Gurus.

Variable Returns Create Timing Risk

One of the problems of return projections in the financial industry is that most of the math is modeled on a straight line.  For example, the math on a 7% average return really assumes that you make 7% per year each and every year.  If you think about it, the rate of return is really the slope between 2 points – a start point and an end point.  If you had a 9% return, the slope would be steeper.  If you had a 5% return, the line would be flatter.

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Read on and enjoy … Variable Returns Can Work Against You in Retirement

Category: Retirement | Tags: , , , |