Winning the War on Savers

The war rages on.

But I’m not talking about the war on drugs, the war on terrorism or the war on climate change. I’m talking about a war that hits even closer to home for many of you.

It’s the war on savers in America.

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It’s been raging since 2009, when the Federal Reserve decided to pin interest rates at zero, and that’s where rates have remained for nearly a decade.

Next week is a date many are expecting interest rates to change course.

But I’m here to warn you that this war will rage on regardless of the outcome.

The dismal income options you face today are likely to be here for at least another decade — but you still have options to generate a steady and reliable yield.

Let me explain…

In October, Ralph Nader, a political activist, wrote current Federal Reserve Chair Janet Yellen a note on behalf of savers in America. In it, he voiced his concerns about the Federal Reserve putting Wall Street before Main Street, and asked when this would change.

Seeing as we are less than a week away from the next Fed meeting, he may get his answer.

But Janet Yellen had a response just a few weeks ago that held a brief but subtle message to all savers — there is still no hope for saving in the traditional sense.

While there is an all-out war on your ability to save and grow your wealth, as I explain below, there are tools to fight back — the best of which I utilize in my service Pure Income.

The U.S. Trapped at Zero

In Janet Yellen’s response, she mentions that if the Fed was to increase rates too soon or too sharp, savers would “undoubtedly” be worse off. She even went as far as to say housing prices would have continued to fall, bankruptcies would have escalated, and more families of working age would be living under one roof.

Most of this is opinionated; I mean no one knows how we would have been had the Fed not intervened the way it did.

But we know what did play out.

Bankruptcies topped out a whole year after rates hit zero. Home prices bottomed shortly after rates hit the bottom, but this was nearly five years after the housing collapse began. Besides, rising home values don’t translate into more income. If a saver was planning on selling a home, then maybe it would help out. But for those of us who focus on saving instead of borrowing to build our wealth, the Fed’s policies are our No. 1 enemy.

And as far as families living together, that continued to climb through 2012 — when home builders such as Toll Brothers started constructing properties designed just for this.

Our unemployment has halved since 2008, but the labor participation rate — the amount of willing and able bodies still looking for work — is the lowest it has been in four decades.

Meanwhile, the pockets of those on Wall Street have seen profits soar, as borrowing costs were pegged near zero. Stocks have continued to set record highs as our economy sputters along at a sub-2% growth rate.

Usually the Fed hikes rates to slow our sizzling economy. Even though we’ve seen hints of a recovery now, it has been far from balanced or as strong as the U.S. economy needs if it is going to suddenly stomach the higher interest rates American savers need to salvage our income needs.

Janet Yellen concluded that the pace of raising rates will be ever-so gradual, because, as she explained, an aggressive rate rise would “undercut the economic expansion necessitating a lasting return to low interest rates.” This tells me one thing: The war on your savings account is nowhere near being over.

Get Ahead of the Fed

This is the sole reason we designed Pure Income: to focus on generating income in your portfolio.

To do so, it utilizes an options strategy that many on Main Street haven’t heard of, yet Wall Street uses it daily. The strategy consists of selling put options, often referred to as put selling, to generate a steady stream of income.

It has consistently generated double-digit yields in even the most conservative fashion. But for those comfortable with managing their accounts and taking on a bit more risk, you stand to collect a double-digit yield in just three months!

While Mrs. Yellen has made clear the Fed is going to be very gradual when it comes to raising rates, we will continue to utilize these unique strategies to generate substantial yields day in and day out.


Chad Shoop
Editor, Pure Income

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