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elastic_church

Could just leverage up on some 30 year treasury bills for at least 9% annually.

3-4x leverage will get you that.

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Where are you getting 9% from annually with T-bills?

with leverage..... as aforementioned

It would be amazing if you could get leverage at rates below T-Bills. You are most certainly not at lower risk than the US government. It may be possible if you play duration arbitrage taking short term loans to buy long term treasuries. But then your playing a very dangerous game.

Would be amazing right

Four child replies deep and someone mentions that leverage could be dangerous, might be a new record folks!

Ironic if you are successful then poor people that can't even lock up $1,000 for a few years will say you are a rent seeking mess.

You can have margin interest rates below the 30-year rate. Is that amazing? (Edit: Never mind, I see this possibility was mentioned in another comment. If your point is that your previuos comment about getting 9% using a leveraged investment in 30-year bonds makes no sense, I agree completely.)

Its not that leverage is dangerous necessarily - if you could get money at a lower rate for a similar time period its in fact nearly risk free. Its just that these opportunities are extremely rare and short circuiting it by using shorter term debt negates the benefits.

And tie up at least $1k for 30 years... most people can't afford to do that.

The current rate is 2.9 and the long term average is 7. If you can get a 9 return right now, it's illegal.

a) its not tied up, treasuries are one of the most liquid markets, you can buy and sell in a milliseconds notice.

b) if you are talking about self directed investments at all, you are waaaaay past the financial situation that "most people" are in and probably accepted that a long time ago

c) and what's 2.9 multipled by 4?

And what happens if the inflation rises and interest rates follow? You'll be earning a cool 7% nominal interest rate and a -2% real interest rate.

If you invested in 30 year treasury bonds six months ago, you have lost 15%. With 3-4x leverage you would have lost half of your investment!

yep, fortunately you have those 9% coupons to lower your cost basis

but really thats what the stop losses are for

(man this really isn't the place to talk about financial markets huh, whats this article doing here then)

So borrow money to lend money? What if the interest rate changes in those 30 years?

> So borrow money to lend money?

this is how it works. you don't think those lenders were lending you their own money do you?

> What if the interest rate changes in those 30 years?

the original loans are almost certainly fixed rate, the end borrowers may very well have to pay an adjustable rate, which just means more profits for the intermediate lender.

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