Six months ago, I alerted readers to the very attractive benefits that the TreasuryDirect program offers to investors who are defensively sitting on cash right now.
Since then, those benefits have continued to improve. Substantially.
Back in November, by holding extremely conservative short-term (i.e., 6-months or less) Treasury bills, TreasuryDirect participants were receiving over 16x more in interest payments vs keeping their cash in a standard bank savings account.
Today, they’re now receiving over 30 times more. Without having to worry about the risk of a bank “bail-in” or failure.
So if you’re holding cash right now and NOT participating in the TreasuryDirect program, do yourself a favor and read on. If you’re going to pass on this opportunity, at least make it an ‘eyes-wide-open’ decision.
Holding Cash (In Treasurys) Now Beats The Market
There are many prudent reasons to hold cash in today’s dangerously overvalued financial markets, as we’ve frequently touted here at PeakProsperity.com.
Well, there’s now one more good reason to add to the list: holding cash in short-term Treasurys is now meeting/beating the dividend returns offered by the stock market:
‘Reaching for yield’ just got a lot easier…
For the first time since February 2008, three-month Treasury bills now have a yield advantage over the S&P 500 dividend yield (and dramatically lower risk).
Investors can earn a guaranteed 1.90% by holding the 3-month bills or a risky 1.89% holding the S&P 500…
The longest period of financial repression in history is coming to an end…
And it would appear TINA is dead as there is now an alternative.
And when you look at the total return (dividends + appreciation) of the market since the start of 2018, stocks have returned only marginally better than 3-month Treasurys. Plus, those scant few extra S&P points have come with a LOT more risk.
Why take it under such dangerously overvalued conditions?
If You Can’t Beat ‘Em, Join ‘Em
In my June report Less Than Zero: How The Fed Killed Saving, I explained how the Federal Reserve’s policy of holding interest rates at record lows has decimated savers. Those who simply want to park money somewhere “safe” can’t do so without losing money in real terms.