Playbook #077: Short Term Notes

🖼️ The Big Picture

Frustrated that you’re sitting on cash while inflation eats away at it, but want to remain liquid so you can jump on the right opportunity when it comes along? If you’d like to earn a little interest… a little “fun money”... along the way, then Short Term Notes might be for you.

There are a few ways to do this, but common tools include CDs (certificates of deposit), U.S. Treasury Bills, and even Short Term Private notes.

Normally, in all of these cases, investors are incentivized with higher yields for longer terms. However, in today’s world of high inflation and rising interest rates, the yield on a 12-month U.S. Treasury Bill (which is known worldwide as a “risk free asset”) is actually higher than the 2-year, 5-year, 10-year, or 30-year rates.

Imagine locking in 4% on what investors regard as the safest investment available. In “normal times” (what many would call the last decade or so before the pandemic) with ~2% inflation, anyone looking for a wealth preservation strategy would be over the moon with that return.

Today, with inflation much higher than that, it’s not as sexy. But, depending on your economic outlook and timeline for buying assets during this recession, some investors are locking in 3 month, 6 month, or 12 month CDs, Treasury bills, or private notes so they can at least keep pace with inflation while they patiently wait for the right opportunity.

🔢 By The Numbers

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