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Written by Administrator
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Sunday, 29 July 2007 |
To a beginning investor, it always helps to expand your knowledge of financial terms and one that i've come across quite
frequently is "yield curve".
Often times, the term "Yield Curve" is mentioned in financial articles, and the phrase
"the yield curve is inverted so yadda-yadda-yadda" is thrown around back and forth.
The simple definition of what the yield curve is is the relationship between short and long-term
interest rates (or yields) of US Treasuries (bills and bonds) . When you graph the years to maturity vs. the yield (%), that is
what a yield curve is.
Just like CDs, normally the longer you loan out your hard earned dollars in treasuries,
the higher the return or interest rate should be when the treasuries mature. However, when
the yield curve is inverted, it means short-term treasuries have a higher rate
of return than long-term treasuries.
What It Predicts
- A normal looking yield curve is supposed to be a positive sign of the economy,
- An inverted yield curve is supposed to be a prediction of a recession and that interest rates will be lowered. The reason why an inverted yield curve is ominous is because a recession usually follows it most of the time, however not ALL the time.
- A flat curve in which all the treasuries have the same rate regardless of maturity date is a sign of uncertainty. It could either become a normal yield curve or an inverted one.
- A steep curve is when the long term treasuries yield 2% or more compared to the short term yields. For example, on average, a 20 year treasury yields 2% more than a 3 month bill. When the yield difference is greater than 2%, then it is a sign that the economy will do well.
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Last Updated ( Sunday, 29 July 2007 )
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Written by Administrator
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Tuesday, 26 June 2007 |
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Wow, I just watched this nice 15 minute New York Times documentary about adolescents in Los Angeles and how they approach money and I can't say I'm surprised at the way rich kids treat money. These are future Paris Hiltons that America's parents are cultivating, aka "trust fund babies". Teens owning several different thousand dollar handbags just to look cool for high school is outrageous. Click here to see the NY Times documentary. On the other side of the money fence, they also show teens who are working to apply for school financial aid and first generation immigrant teenagers who understand the value of a dollar. Schools do not generally have finance classes in elementary school, so this knowledge must come from parents. It's important to instill the values of saving into our children in this day and age of "spend now, worry latter" instant gratification. I don't think any parent wishes their children to grow up heavily in debt. So what are some good ways to teach kids about money?
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Last Updated ( Tuesday, 03 July 2007 )
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Written by Administrator
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Tuesday, 26 June 2007 |
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Just out of college and not sure what to do with your new job income? In this small guide, I've summed up what I felt are the most important ideas you'd need to know in order to have a comfortable retirement. 
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Last Updated ( Tuesday, 26 June 2007 )
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