Earning a piddling interest rate on your CDs? Iconic investor Warren Buffett feels your pain.
At the annual Berkshire Hathaway shareholders meeting this month, Buffett said he feels sympathy for fixed-income investors who depend on yields hard-hit by sluggish economic growth and the Federal Reserve's easing.
From Margaret Collins, Noah Buhayar and Zachary Tracer at Bloomberg:
"I feel sorry for people that have clung to fixed-dollar investments," Buffett said at Berkshire's annual meeting in Omaha, Nebraska, where the company is based. Individuals trying to live off bond payments are "victims" of U.S. policies to lower borrowing costs, he said.
"The problem faced by people who have stayed in cash or cash equivalents or short-term Treasuries, it is brutal," Buffett, 82, said at yesterday's gathering. "I don't know what I would do if I were in that position."
Buffett is right that many CD investors, unable to make ends meet on microscopic yields, face a difficult choice: move into riskier bond investments or start digging into savings (that they may have trouble replacing later) to pay their bills.
Those struggling with such a choice may want to consult a fee-only financial planner to get some advice on how to move forward. After all, it's unlikely CD rates are going up anytime soon, so taking steps to adapt to low rates may be unavoidable.
What do you think? Are you still putting money in CDs? Do you see rates going up anytime soon?
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