As telly mentioned, Vicki Robin does make the point that at today’s rates, T-bonds might not be the only choice. Joe Dominiguez, she says, had T-bonds that payed him about 6%, which is not a bad investment for a conservative rate. The advice in the newer version of the book seems to push towards investing enough capital in T-bonds or some other form of stable investment to cover your base-line expenses. Your invested cache, discussed in your next part of this series, should probably go into index funds.

Also I find that the “growth” several commentors seem to be worried about maintaining is against the whole flow of this financial independence plan. As you are working through this program, you are doing soul searching and finding what “enough” for you is. Any growth above that is icing on the cake, really. You can always take a part-time or temporary full-time position to care for whims later, as well.

I do think it’s appropriate to look at some of the high yielding, consistent dividend growers for this income today.

The way I see it: If something is paying 4%, you really aren’t making any money. You’ll be giving up about 1% in taxes, and inflation (which they discount as being insignificant) will eat the other 3% (at current rates of inflation). So while you are not actually touching your principal, the real value of your principal is actually decreasing. You’d have to be re-investing all of your gains to maintain your principal at it’s true value. If you’re not re-investing, you will eventually come to a point in time where your income will no longer meet your needs unless you are constantly decreasing your standard of living. If you’re 65, that may be ok.

Now, if you had bought 30 year Treasury bonds when they were paying 9%, you’d be sitting pretty right now.

Maybe I-Bonds/TIPS (treasurydirect.gov) would be a more appropriate investment, in today’s environment, since they pay interest AND appreciate in line with inflation. Anyone have any thoughts on this idea?

When you realize that government is the entity that actually causes most of the economic misery we face, you end up realizing that we’re not going to get out of this.

Sometimes I wish I’d never made an in-depth study of economics. Looking around right now scares the hell out of me.

If you want to argue that T-bills are NOT 100% safe or ‘guaranteed’ these days, then you might as well give up on living in the USA now because we aren’t going to last much longer anyway. :)

What is a good investment now given the current geopolitical situation? (and the current mortgage/foreclosure/debt crisis)

T-bills aren’t an “investment”, they are a safe place to park money for a while. At the moment, I’m parked mostly in cash in a few FDIC insured savings accounts that pay anywhere from 3.9 to 4.5%. Stocks just seem too “bubbly” right now.

Back the 1980s you could get a 13% CD (hidden under the high inflation). So instead of chasing unknown returns on stocks you could have your safe 13% CD.

I todays markets of 4-5% CD and 4% treasuries you don’t have the opporunity for growth that investing in the methods written by the author in their era.