With the current high inflation, high interest rate environment, I would like to experiment on buying and holding low risks investments such as CDs and Money Market Funds as opposed to investing in stocks for the long term.
The reason for this is simply to take advantage of the high interest rate environment without worrying about the downside risk and volatility.
We have been used to low inflation rate environment but in the most recent years, inflation has risen to levels that are at least double the ideal inflation rate (> 4%).
I checked the inflation rates historical data and found that the period where inflation was sustained over 4% was during the 1970s up to mid 1980s.
INFLATION RATE 1968-1986
During this period, the fed fund rate just moved inside the range of 4% to 20%.
FED FUND RATE 1967-1986
The S&P 500 performance during the same period is not good. It fell more than 50% from 1968 to 1982 before recovering back to its 1968 levels
S&P 500 PERFORMANCE 1968-1990
With consideration to the above arguments, I have decided to just focus investing on the current available top performing CDs and MM funds from reputable banks and will benchmark it against the performance of S&P 500 ETF, SPY.
I have started with $419,982.84 on March 2023 and will measure the performance of my CD portfolio until March 2028.
Results will be updated monthly: