Inflation is 2.89% here. I would still earn with 4% interest. And even if I wouldn't higher interest is better, right?

Even if you were right, I'd still rather have 4% than 1.something%.

So is there a catch to the government bonds? I'm having trouble finding the actual interest you get on them right now.

Investing is for blood suckers.

And now we hear from the fucking communist shit sucker.

Steephie - If local CDs (I was forgetting you weren't in the US) aren't making as much then don't use them. But as has been pointed out, you aren't going to make 20% and you aren't even going to make more than 5% if you don't take risks. Great reward requires great risk. The best way to reduce that risk is with research and knowledge.

I know. I don't expect 20%. I don't expect 5%. I was just using that to explain how cautious I am.

I'm just looking for something above, like, 2.0%.

So any catches to government bonds? Anyone? Or confirm there aren't any? Elaborate on the topic?

The most important thing is not to spend your money.
If you make 4% of $1000 it's just $40 a year. You can earn this money just by buying a computer game on sale instead of release or do some hours extra-work.
The more important part is the $1000 you already have...
(Just to put this in perspective.)

I'm happier than shit at my leveraged 3X S&P 500 fund and leveraged 3X tech fund. (SOXL and SPXL) - doing insanely well and making me money hand over fist. <wipes the bloody smears off my face....licks my fingers...)

Steephie, if you don't know how to/what to invest in, your best option is to choose an indexed fund. The funds I refernced above are leveraged funds - meaning they are intended to perform at 3 times the performance of the index they track...meaning higher risk/higher reward.

Typically under a dead-locked split government, stock market does OK, because businesses know there are no radical changes coming -- so putting your money in a fund that track the S&P 500 is a good safe bet to make more than the pitiful interest you will make in a bank. If you are outside the US and can't invest in US funds for some reason, there are probably comparable tools available to you.

You can actually buy annuities that are longer term and give better interest rates. We have one on a fixed rate that is paying 5.75%. Of course it was bought in a better market, but look around for annuities. They are zero risk.

Bonds versus stock market...

When bonds do well, stocks do poorly and vice versa, at least with US bonds. Right now the bond market is slowing because the stock market is improving so it is tile to get out of bonds and convert them to stocks.

Draug -- The only problem with the annuity for his situation is the likely minimum investment amount, and the fact that he will have zero access to the money if he needs it. Plus, he's going to get, what, maybe 4 to 5%? I would be *shocked* if he can't get that much in the S&P overt the next 2 years.

Look at the 3 Y chart for the S&P 500 - it's a damned ski slope!!

http://investing.money.msn.com/investments/charts?symbol=$US:SPX#{%22zRange%22:%227%22,%22startDate%22:%222010-10-6%22,%22endDate%22:%222013-10-6%22,%22chartStyle%22:%22mountain%22,%22chartCursor%22:%221%22,%22scaleType%22:%220%22,%22yaxisAlign%22:%22right%22,%22mode%22:%22pan%22}

The Fed has also recently announced that their QE program has esentially no end in site - stock market loves this. Plus, as stated before, under gridlock we have no reasonable expectation of radical tax changes. The market have already absorbed and adjusted to new employment levels and corporations are profitable. Barring Obamacare truly fucking up the economy or another majotr Mid-East war (doubtful), stock should continue to do well through the rest of Obama's presidency - just my prediction...I am not a certified advisor. :)

And then, come 2016 when we finally get a free-market conservative capitalist in the White House, and we *truly* unleash the power of a pent up market....whooo boy...!

Actually, the annuity we have grants us access by checkbook to the funds in a minimum of $250 withdrawals. But yes, the initial deposit was 50k minimum and they don't allow us to deposit more in now that it is in effect unless it is at least 50k as well.

And he said no risk. I can't speak to what is available where he lives, but the annuity is guaranteed by the FDIC/FSLIC. Zero risk.

Ah - I used to have a GMAC Demand Note acount which worked in a similar way. Min balance requirement, minimum check ($250 as well), and gave a rate that was probably about 2% above prime at the time. Was good as a savings account, but I still wouldn't use it as a primary investment tool - more of a "this is where I keep emergency funds" account.

Seems finding anything with a decent fixed rate of return is damned near impossible these days unless you have fat cash to invest.

NO risk? Yeah, I ignored that. If he wants to make money with no risk, then he's just another communist. No risk doesn't exist in making money.

Even your annuity has risk -- if you lock your money in to an annuity and the economy tanks and interst rates and inflation sky-rocket, you can effectively lose money in an annuity. Yes - the risks are much more minimized, but they are there.

That why, again, I referenced the S&P 500 -- you can find a no-load mutual fund, out your money in and only marginally keep an eye on it for a couple years. He'll make money that way -- I think there is a very small risk of the S&P losing money over a 2 year period.

Assuming terrorists don't fly airplanes into major buildings.

Yes, I am making such an assumption. I'm also assuming that the Democrats will not capture the House in 2014. If that happens, all bets are off and we're all fucked.

They do and I immediately convert back to bonds.ay as well get something for paying 50% in taxes.

@steephie - with a government bond, the only risk is that the government will default on the loan. And with something from the ECB or the Netherlands, that won't happen. Even Spanish bonds are fairly safe now, if you're only looking at a two year time period.

Just don't put it in the stock market. I'm pulling my investments out right now (as are many institutional investors) because I expect a 20% correction in the next 6 months.

And the bonds are great if that 20% correction as it will just drive the bonds up.

Well, it would drive the price of bonds up, Draug, which means the yields would go down.

You can trade in bonds, not just buy them and hold them till they reach maturity.

That's true. I just don't know if steephie would be willing to do that.

Steephie - how about this 300 year old chinese vase for 124 Euros?

http://www.ebay.nl/itm/Antique-Chinese-handpainted-Kangxi-Century-Roling-vase-Signed-/131008364194?pt=LH_DefaultDomain_146&hash=item1e80b4fea2

There has to be a profit here suely...

Lot to digest here...

So...

As for the risk of annuity due to inflation: first of all: I will probably not put all my money into anything. Second, if there's, like, 6% inflation, I would still be hesitant to invest in something risky instead of save. 3rd, aren't there also unnuities that take inflation into account? So basically give you back the same value at the end including interest, so with a lot of inflation a lot of money? Wouldn't that be safer than just putting it on a bank?

What Draugnar has could actually work for me, although I wonder for how many years that deal was? I may be moving out and all when I'm 18 and I don't want to get into trouble because of money I can't reach.

Other than that, I think I will never figure something out that works much better for me, is no risk and easier to do. Maybe I'm asking for too much, although I'm just looking for more than 2% :P

After I've had Draugnar's answer I think I'll maybe research if that does indeed work for me and then I'll just tell my parents I don't plan to spend it soon and if they know a way to safely get a bit more profit and all that. They are probably a little bit more into this topic than me and I don't have to double check everything they say :P

Either way, thanks everybody for trying, I do think it was a fun discussion but I'm too busy to have it now I fear :)

So yeah, if Draugnar could answer if that is a 2-year annuity I'll probably drop it after.

You can get to the money in the annuity we have at any time by simply writing a check. It is just a minimum $250 to withdraw. The key is the initial deposit is big: $50,000. But it does earn way better than a bank is giving even on 2-year CDs.

And the term is lifetime or until you have withdrawn it all.

Then that sounds perfect. So where do you get an annuity? You imply it's not a bank, so where do you buy it? Is it from the government? Insurance company?

Sorry for asking questions that may seem obvious to many of you :P

What I noticed is that with many of these things you can't just google and find a good deal. You really have to search, and for that I have to know a bit what I'm looking for, hence all the questions.

And yes, I know that's 4 more questions while I said I would be done now :P

Ours is from Western Southern Life. But I don't know what is available to you on that side of the Atlantic.