Passive income

I remember one day walking into a 7/11, in maybe 2002, and there were 2 guys in suits, totally dishevelled, collars undone, looking like they've been awake for 3 days, depression coating their faces, and they had a stack of scratch tickets that they were silently just scratching off.

The story I have in my head is that their business fell apart and this was some past ditch desperate attempt to save it with the little money they had left. I have no idea what actually happened but here we are 20+ years later and I still think about them occasionally.

I know of a few small stores that owe their livelihoods to the local gambling addicts and the lottery machine. The entire business if dedicated to a few whales since selling snacks and coffee to randos didn't work out and they would otherwise close. They even set up private rooms where they could sped the day scratching tickets as they would come in and blow and entire pay/welfare/retirement check.

The logic is always the same, "I'm up $500 today" not even calculating the losses and "I just need one big win". People will farm gamblers like cattle.

Dude it was depressing stopping off at the beer store on the way home from work for a 6pack so I could kick it and relax on the couch...

...and there'd be a group of blue collars going there to cash their weekly paychecks, buy a couple 40s and $50 worth of scratchers. They'd win $10, and buy $10 more worth of scratchers. They'd win a TICKET, get another and win nothing, then complain that they were "so close" to winning 10-grand.

The keno addicts at the bar i work at are wild. They just keep silently putting in money and watching the drawings. I prefer that to the ones who try to explain their strategies to me or complain that some number appears in every drawing. Or the guy who came in Wednesday night and kept betting $10 that the first pitch of every at bat of the Mets/Brewers game was gonna be a strike. It's bleak.

I remember hearing a story like twenty years ago about a person that figured out that serial number were disclosing payouts. They would buy a bunch, find the winners, scratch them, then return the losers for their money back. I think I heard about it on a planet money or this American life ages and ages ago.

I won like $250 on the first scratch off I got with my boyfriend. Broke my reality, I want to try it one more time to see if we'd win anything but I gotta stay safe

Oh, I get it now! 8%! How droll!

(What the fuck is he talking about?)

I remember getting really frustrated as a young man when I decided to take that advice, and wasted hours looking for these mythical 18% return accounts.

I bonds have variable rates. If you buy an i bond at a certain rate it only keeps that rate for 6 months.

It depends! Let's say a 8% Treasury exists and you want to buy it today. To establish its price, you need to know:

• What is today's yield curve? (i.e., what is the market's expectation for interest rates at different points in the future?)
• When does the bond mature? (i.e., how long until the face value of the bond is paid out back to the bond holder?)
• How frequently does the bond pay interest payments (coupons)?

I've put together a quick calc based on Federal Reserve yield curve data as at 27 Sept, assuming an 8% Treasury maturing in exactly 20 years, with semi-annual coupons (as most government debt is semi-annual). Google sheet calc

If you bought $3m worth of this fictional bond today, you would own $1.95m notional of the bond. You paid $3m for $1.95m of US gov't debt effectively because the bond was issued in the past at a higher yield that what the market is expecting the government to issue bonds at in the future.

Every 6 months, you would receive a coupon of c. $78,000, or effectively $13,000 per month. This is interest the gov't pays you for having lent it money (or rather having bought the debt from whoever lent it money.) These payments are guaranteed as long as the US gov't remains solvent.

Finally, in 20 years' time, you would also receive the principal payment of $1.95m. This is the government paying back the amount it originally borrowed. Note that it will likely be worth significantly less in real terms in 20 years!

Importantly, you don't have to hold the bond to maturity and wait 20 years to get your $1.95m. Just like you bought the bond at a bid price of $3m today because rates are lower than the coupon yield of the bond, if the yield curve decreases further, the price of your bond in the open market will increase. E.g., if yields went down 1% across the curve, your $3m investment would now be worth $3.4m and you could sell it for a tidy $400k profit!

Treasury is pretty safe.

A year ago we didn't know the market would grow so much, or at all.

Today we don't know if these trends will continue, stop, or even reverse. Past performance doesn't guarantee future returns, yada yada.

The whole point of bonds is that they be more stable and reliable than other securities. They're a useful tool for investors looking for stability.

Set it and forget it. I dont have to worry about the dow contracting with a treasury bond. That's the literal point.

On the other hand, If I can get $20k a month with one of the safest investments around, I'm not screwing around with the stock market.

At any point in time those could also shrink by 25-35% over a year

But I don’t have a Brazilian dollars :(

We have had 2 assassination attempts on someone running for the highest public office in the country in 3 months. One of the people currently running for office who has a chance at winning tried lost the last election they were in and then tried to take over the government by force.

Our country is not stable.

I would much rather invest in a more stable country like Sweeden or Switzerland.

Oh and 3 seconds on Google proves you wrong. Switzerland is the best and most stable economy and country in the world... again. https://www.usnews.com/news/best-countries/articles/2023-09-06/steady-switzerland-is-once-again-the-worlds-best-country