Between inflation that soared to 7.9% in February 2022 and a stumbling stock market, investors lack confidence in where they should invest their money. The stock market has been very volatile during the first part of 2022 due to a plethora of uncertainties. Investors looking for a more reliable source of income often turn to treasury bills. A significant problem with these is that most bond yields are tiny and often deteriorated by inflation. With high inflation rates, a person holding cash will see a decrease in the purchasing power of their money. This $100 freebie will cost $107.9 at the current rate. Whatever investment is sought, the return must at least match or exceed the current rate of inflation to maintain purchasing power. Given this, two possible investment choices include Series I savings bonds and high yield fixed income investments.
A Series I bond is a US government savings bond that pays both a fixed interest rate and a variable inflation rate. The fixed rate component is announced every six months on the first business day of May or November. This fixed rate is then applied to all Series I bonds issued over the next six months. This rate does not change throughout the life of the bond and is compounded semi-annually. On the other hand, the inflation rate aspect of these bonds is also announced twice a year in May and November, but is determined by the evolution of the consumer price index (CPI). The CPI measures inflation by tracking the average difference in prices paid by consumers for a basket of goods and services over time. This variation in inflation is applied to the bonds every six months. The total rate that represents the combination of these two, called the composite rate, has been set at 7.12% for the period from November 2021 to April 2022. Currently, the bonds have a current fixed interest rate of 0%. The entire composite rate of 7.12% is drawn from the variable inflation rate to compensate for the extraordinary inflation that is underway.
The Family Business Fund (FBF) offers an alternative form of high-yield bond investment. Investment in FBF is through a promissory note with an initial face value of $20,000. The note matures in 60 months, but FBF allows its investors to receive their money sooner if they wish. Money can be withdrawn at any time after the Family Business Fund’s 18-month lock-up period. The Notes have an above-average annualized return of 15% that is paid monthly to investors. Additionally, FBF provides an option to reinvest returns so that capital can accumulate, leading to exponential growth.
Both the Series I Bond and the FBF Promissory Notes could be excellent investment options during this uncertain time. Series I bonds that track inflation allow investors to retain most of their purchasing power. On the other hand, the investment interest rate of the Family Business Fund is high enough that it can eventually beat inflation and provide a return. Another big difference between these two options is that FBF offers a fixed rate of 15%, while Series I bond rates can go up or down with inflation. The Federal Reserve is expected to start raising interest rates this month (March 2022) to reduce inflation. The next adjustment period for Series I bonds begins in early May 2022. If the Federal Reserve is successful, interest rates on this type of bond should drop. It is also important to note who the issuer is for these two investment options. Since the government issues the Series I bonds, they are considered “risk-free” assets. FBF Notes are unsecured obligations of FBF, which basically means that if FBF were to go bankrupt as a company, the investment could be lost; however, FBF is constantly seeking to perfect its business model and reduce investor risk.
Company Name: Family Business Fund
Contact: Douglas Muir
E-mail: Send an email
Address:433 PLAZA REAL STE 275
Town: BOCA RATON
State: FL 33432
The country: United States