Investor Junkie
My Business and Financial Freedom Journey

The Poor Transfer Wealth to The Rich Via Credit Cards

Reuters has a story about the poor getting bamboozled with yet another scam.  No it’s not three card monte, or state run lotto tickets.  It’s via credit cards, and the rich are getting well.. rich off of them.  According to the Boston Federal Reserve report, with its pretzel logic, only poor people pay by cash, and the rich elite pay via credit cards.  Who better to perform the study than the Federal Reserve.  With their multi-generation devaluation of the dollar, the Federal Reserve is an expert about wealth transfer.  The report though, is class warfare at it’s finest.

Life Isn’t Fair. Now Get Over It.

Lets deal with one of the more common realities of life.  If there isn’t an axiom more self-evident than that life isn’t fair.  It never has been throughout the history of mankind, nor will ever be.  No matter how much others try to make right with what’s wrong in the world.  Life will still be unfair for someone somewhere.  In addition, what others made right for one group, could very well “wrong” another group in the process.

Once you realize this yourself, you’ll lead to a much happier life.  Unfairness is what makes everyone unique.  It makes you different than anyone else.  You’ll stop asking why are they richer than me?  How come my child is awful in sports?  You won’t be asking for government intervention to fix what’s “broken”.  Yet we constantly ask our politicians to help fix something that directly affects us in life because it’s unfair.

Ginnie Mae Investing

CD and money market accounts currently offer dismal returns.  What is an investor to do get higher returns, yet not drastically increase risk?  As I mentioned in my 4% Rule to Investing, Ginnie Maes are a good possible alternative.  Who is Ginnie and does she have anything to do with Fannie and Freddie?  Ginnie Mae, otherwise known as the Government National Mortgage Association, is a U.S. government-owned corporation within the Department of Housing and Urban Development (HUD).  Ginnie Mae provides guarantees on mortgage-backed securities (MBS) backed by federally insured or guaranteed loans, mainly loans issued by the Federal Housing Administration, Department of Veterans Affairs, Rural Housing Service, and Office of Public and Indian Housing. Ginnie Mae securities are the only MBS that are guaranteed by the United States government.  Ginnie Mae, which extracts fees for guaranteeing mortgage investors are repaid, is a smaller and more conservative player in the mortgage market than Fannie Mae and Freddie Mac were.

Expect Even Lower CD Rates

Want some insight into why savings, CD rates, and money market rates are low and about to get lower? The FDIC recently ruled banks that are not “well capitalized” will not be allowed to sell fixed investment products for more than 75 basis points (or 0.75%) above the national average.  Whatever “well capitalized” means is subject to FDIC’s terms.  This effectively puts a cap on the highest rate any bank can offer.