The Fed Shift Nobody Mentions

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This makes me angry. The Fed, the very people who control interest rates in America, they just gave everyday investors literally the best money-making chance we've had in over a decade. And no one's talking about it. Not the news, not your bank, not your financial advisor. Why? Because, well, some people make more money when you don't know about these things. And everyone's scared of the AI bubble popping. It is going to pop at some point. And meanwhile, the big money investors, the billion-dollar funds, the pension fund managers, they're quietly buying $300 billion. So they've just moved into one type of investment in just the first six months of this year, $300 billion. And I share with you ideas that I see in the market all the time, like EXFY ticker the last two weeks up about 34%, or TENB up about 58% the last two weeks. And I share these because I believe you deserve to know what really happens in the market. And I believe you deserve to understand and learn the skills that the pros have, which is what this is all about. So I'm going to show you today something that might be more important than any stock I've ever shared on this channel. Today I'm going to give you a complete plan for earning income on your money using the same tools the $300 billion investors just used. And I'll show you something that I call the risk reward staircase. You can pick the level that's right for you. And it's going to be a lot of the data in this video. And I'm going to put it all for you into phelixfriends.org slash income. Especially if you're in the UK or also in Europe, some of the things we talk about are accessible to you. So I'm going to give you alternatives in the free document, the free research document you can download at phelixfriends.org slash income. Links down below in the description. It's completely free.

Why Saving Cash Makes You Poorer

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So let me ask you something. How much does your bank pay you for keeping your money there? Where if you're like most Americans, the answer is 0.38% a year. So for every $100 you have in the bank, you get 38 cents a year. Yeah. Now, the problem is that inflation, how much prices are going up by every year, is 4.2%. So what does that mean? Everything. Food, gas, insurance costs $4.20 more for every $100 a year, but your bank only gives you 38 cents more. So your money is shrinking 10 times faster than it's growing. So that hundred bucks you saved, a year from now, it is going to buy you less stuff. You didn't spend it, you didn't touch it, you did the safe thing, it's going to buy you less. You're getting poorer just by saving. And this has been going on for more than a decade, by the way. So regular people have been getting slowly poorer because nobody told them. And because the banks and the hedge funds, well, they love it because when your cash sits, they're earning almost nothing. They can play with it. So briefly, how do we got there before we get into the opportunity? In 2020,

How We Got Higher Interest Rates

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the pandemic hit, right? The economy was freezing. They turned rates to basically zero, cheap money everywhere. In 2022, all that cheap money made prices explode. So they cranked rates way up to cool things down, highest interest rates in like 15 years. And then the last two years, interest rates have come back down again. Everyone's relaxed a little bit, right? Now the new guy running the Fed, Kevin Walsh, looks at the numbers. Prices are still going up at over 4%, energy costs are spiking. And he basically says, we're going to keep the rates kind of where they are. So here's what's happening behind the scenes.

The $300B Move Into Interest

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And the news doesn't seem to cover this for some reason. The big money investors, they're selling their tech stocks. They didn't tell you that. So where's that money going? It's going into investment that pays them interest, steady, reliable interest. $300 billion in six months. It's the fastest money move we've seen in history. So the richest, smartest investors on the planet look at the situation, they say, it's time to collect interest. They're not guessing, they have systems, they have rules, they understand the market better than most. And they're pouring the money into not AI, not chips, not space, you know, into the most boring thing that actually pays them. And they do that because they know when to sell. So be honest with yourself here. Drop it in the comments. When do you sell? When do you sell a winner? When do you sell a stock that's gone up? When do you sell it? What's your system? What's your rule? Or maybe you're just sort of hoping it's going to keep going up. Yeah, that's what most people do. That makes you human, by the way. But put it in the comments down below. I think people will find that useful. And every investor I talk to, students, our academy members, just people just like you, people I bump into, I bumped somebody into somebody at lunch yesterday. And they say, Felix, I've had winners. I watched them turn into losers. I held them too long. And I didn't know where to sell. It's the most expensive mistake in investing. It's not picking the wrong stock. It's picking the right stock and then not knowing when to get out. You bought it right, you just didn't sell it right. And it costs you thousands or tens of thousands or hundreds of thousands, depending on where you are with your portfolio. Now, the big money investors just sold their tech stocks and moved into interest-paying investments. And they have a rule for when to sell.

The Costly Mistake Of Not Selling

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Now, because this is so important, it's honestly the most important thing. I'd just love to make videos just about this, but people wouldn't watch them because it sounds a little tedious. So I'm going to run a live session for you on Saturday where I'm going to teach you this for two hours.org. That's literally the whole mission. WentoSell.org. And I'm going to show you the simple system I use, the same approach that I learned from my Wall Street mentors, to know when the winners turn to losers, when we want to get out. And we're all going to learn together. Well, hopefully you'll learn and I'll teach. Now, before I show you properly what this opportunity is where the money's flowing, most investors don't understand this because we've all been taught about growth investing. We haven't really been taught about interest investing because it's been really, really not a very good trade for many, many years. So let me show you how this works with a short little anecdote, and then we're going to go into the very specific tickets that I see the biggest opportunity in and who it's for.

Stocks Versus Bonds With A Story

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So imagine your neighbor comes to you and says, I want to open a restaurant, and I see need $10,000 to get started. So he comes to you. So you have two choices here. Choice A is you put in $10,000 and you earn 10% of the restaurant. The place does well, packed every night, people lining up, you get 10% of the money it makes, right? Could be a lot, could be $5,000 a year, could be $50,000 a year, there's no limit. But if the restaurant flops, nobody shows up, you just lose your $10,000. Probably all of it. That's what buying stocks is. You're an owner. You make money when things go well. You lose money when they don't. There's a second choice though. You could become your neighbor's bank. You could lend your neighbor $10,000. He signs a piece of paper saying he will pay you 6% interest a year. So now you're going to get $600 a year. And in say five years, he just has to repay you the $10,000. If the restaurant becomes a huge hit and makes millions, you still only get your $600 a year. But if the restaurant barely survives, he still owes you that $600 plus the $10K. It's a contract. If he goes completely broke, you get paid before his partners, before his shareholders. You are first in line. That's what buying bonds is like. You're a lender. You get paid no matter what, unless they go completely broke. And most people really only understand choice A here. They only know how to be a shareholder, a partner. They don't know how to be the bank. Because for the last 15 years or so, being a bank paid you basically nothing at all. There's an entire generation of investors here who don't understand this. So very quick, very quick bond

Bond Basics And Rate Risk

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lesson here. I'm not going to bore you to death with this tedious subject, but it's actually very important. There are two types of bonds. There are short-term ones and there are long-term ones. A long-term bond is like a 20-year bond. That changes its value a lot. If interest rates go up 1%, a long-term bond could drop 15-20% in value. Now, a short-term bond is sort of a three-month-long thing. The value basically doesn't change very much. So I'm being very specific here. I'm not talking about long-term bonds. I think they could be very, very, very dangerous right now in terms of losing value. So let's give you

The Risk Reward Staircase Plan

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the game plan. I call it the risk award staircase. There are five steps. We're going to start at the bottom, the safest, lowest paying step, and we're going to climb up. Each step pays you more, but you take on a little bit more risk. You don't have to climb higher than you're comfortable with. Pick the level that lets you sleep at night. Obviously, not a financial advisor not telling you what to buy. I'm just explaining to you a concept here in educational terms so you can make better decisions going out there. And if you want to make even better decisions on your stock portfolio, join us on Saturday at uhwentosell.org.

Step One Treasuries SGOV USFR

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So the safest thing you can do is you can lend to the US government. I don't know if some of you are going to chuckle on that, but that's just where we are right now, right? So the government collects about 5 trillion in taxes and spends 7 trillion a year. 2 trillion gap, not rocket science. And um, where does the extra money come from? They borrow it. They borrow it from people like you, from me, from countries, from anybody who wants it. Now they call these bonds treasury bonds. Basically, they're lending money, you're lending money to the US government and they pay you interest for your money. Why is this the safest investment in the world? Because the US government can, because the US government can do three things no company can. It can raise taxes on 300 million people, it can print money. Um, if they were ever to not pay back a bond, then the entire global economy would collapse. So the rest of the world would try and convince them not to do that mad thing. Now, how do you buy these bonds? Well, you can go to the government website, but it's tedious. There are a couple of ETFs you can buy. SCOF is a fund that holds super short government bonds, three months or less, pays you about 3.8% per year. You get paid every month, which is quite nice if you're a retiree or something. And the value of them doesn't really move because they're about to get repaid by the government. So the price is basically exactly what you're going to get paid back. There's also USFR. This one's a little bit more clever. It's a fund where the interest rate floats. It means if the Fed raises rates, your payments go up automatically. Um, you're not locked in. So you move with the rate. Also about 3.8% right now. Now there's a beautiful thing. Most people don't know if you're in the US, government bonds are exempt from state taxes. So if you live in a high stack state, uh high-tax state like California or New York, where you pay what 10 or 13% to the state for interest, this doesn't get taxed. Again, I'm not a tax advisor, obviously, check this out, but that's what I understand.

Step Two Dollar EM Bonds EMB

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Now, the second step on our ladder, and we're going to go up to number five, is a little bit more risk and noticeably more reward. So some countries are basically under America's protection. I think Saudi Arabia, UAE, Qatar, you know, the US military bases there. And their currencies are locked to the US dollar. The Saudi currency does not change its value compared to the dollar. It moves exactly with the dollar. And B is because these countries are not the United States, they need to offer higher interest rates to get people to lend them money. But because they have America's backup, the risk isn't as crazy as lending to a country with no protection and a free-floating currency. So there's a fund you can buy called EMB ticker symbol. It pays you about 5.8% per year. And all the loans are in US dollars, so you have no foreign currency issues if you are if you're an American. And the fund includes Saudi, Mexico, Indonesia, and a few others. Spread across many countries, which helps because if one country has a problem, the whole thing doesn't fall apart. So if you think about it, about 4% inflation, 5.8% interest, you're actually making some money here, right? You're actually getting ahead of the official price debt.

Step Three Corporate Bonds VCSH LQD

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Now, step numerous thesis is you're not lending to governments, you're lending to the biggest, strongest companies in America. I think Microsoft, JP Morgan, Johnson Johnson, and so on. Same idea. These companies need to borrow money to build data centers, buy other companies, grow their business, you know, pay bonuses to their CEOs. So they issue bonds. Um, you buy those bonds and they pay you interest. You have a contract. If they don't pay you, they go bankrupt. I mean, a company goes bankrupt. The people who lend them the money, which would be you, get paid before the people who own the stock. That's how it works. Bond investors are preferred over shareholders. Shareholders are like the bottom of the barrel when a company goes bust. So there are two ETFs I would look at. One is called VCSH. This fund holds loans to big companies so that you in the next one to five years pays about 4.4% a year. Doesn't move a lot on value, very calm because the bonds are very short and the fees are basically zero, 0.03%. Now there's another one, which is called LQD. And this fund holds longer-term company loans. They pay 4.5% to 5.2% per year, a bit more income, but the price bounces around a bit more. So if interest rates go up a percent, this fund could drop maybe 7, 8% in value. So the value differences are a lot bigger. So if you're planning on selling it at some point, something to bear in mind. And there's a trick that the pros use, they call it the barbell approach. So instead of putting all your money in one spot, you split it in half. Half in the short, half in the in the longer term, high paying care paying thing. Uh, and that way they sort of balance each other out. That's how the pros manage money if they're not quite sure what which way to go. Step number four, and and and and tell me by the way, if it's useful for you to get your head around wrap your head around bond investing a little bit here, put in the comments, you know, useful, or uh please stop. Uh someone make them stop, uh, put a cork in it, that sort of thing.

Step Four Junk Bonds HYG Risks

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Now, step four, we're getting into a lot more risk here. And you need to be aware there's obviously risk with everything, but you need to understand this risk. These are called junk bonds. That sounds really terribly scary. But all it means is that you're lending to companies that the rating agencies, the people who grade companies are safe, same people who said uh the subprime mortgages were safe pre-2008, you know, those trustworthy, lovely, lovely people. Um, they consider this to be high risk. So they're smaller companies or companies with a lot of debt. Um, and the rating agency obviously saying there's a chance this company might not pay you back. So why would anybody lend them money? Why? Money. These risky companies have to pay higher interest to lend, get people to lend them. So more risk, more reward. Um there are there's an ETF called HYG, it's the biggest risky company bond fund in the world, pays about six and a half percent per year. It's about double what you get from the government. And if again, if you think about the 4% inflation, roughly, you know, you are actually ahead here. But you have to understand risky company bonds are a bet on the economy. When the economy is booming, these companies usually make money and and and even the risky ones pay their bills. So you get your six and a half percent in life is wonderful. Uh, but when the economy goes down, and it always goes down eventually, the weak companies tend to go broke. And your fund in that moment could lose 15, 20, 25% of value historically. So this isn't a sort of park it and forget the type investment. Now, this is step number five, last

Step Five Tax Free Munis VTEB

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step. And it's different from all the others. Steps one to four are about climbing higher for more money. Step five is a sidestep. It's not about earning more money, it's about keeping more of what you earn. This is for people making good money who are tired of watching huge chunks disappear into taxes. So the top federal tax in the US is about 37%. So for every extra dollar you earn above a certain level, 37 cents goes straight to the government. So if you put your money into a high interest saving account, which gives you about 3%, you could make $30,000 on a million, you have a million. But at a 37% tax rate, the government's going to take about 11,000 of that. So you only keep 19%. So there are these special type of bonds, loans to cities and states to build roles, schools, bridges, that kind of thing, and they're exempt from federal income tax. And depending on your state, you might skip state tax too. You obviously check that out with your advisor. So here's the maths. Say a million dollars in a savings account at 3%, $30,000 interest. After the tax, you're going to keep $19,000. Now, a million dollars in a city-state bond fund at 3.5%, no tax, you keep $35K. That's a $16,000 difference in your pocket every year. Same amount of money. And the bigger your pile, the bigger the gap gets, right? Oh yeah, and the fund I should have mentioned. There is VTEB, which is a fund that holds about 10,000 city and state bonds from all across America, pays about 3.5% a year. And you don't pay federal tax on it, very little management fees. MUB is the other one, similar fund, pays about 3% per year, also tax-free. Now, of course, you know, Detroit went bust in 2013 and that sort of thing. So there's something to think about. They're not the federal government. But you get that big tax benefit. And if you are in the high income tax bracket, it pretty much beats every mutual, pretty much beats every corporate bond out there because of the tax benefit. So if we put this all together, and I know I've thrown a lot at you, which is why I gave you that document at the beginning. Step number one down here is really government bonds. SGOV, US of R, we talked about it, about 3.8%, safest bet, no state tax, just cash parking in a safe spot. It's a good place to put the short-term bonds to put an emergency fund as well, I would argue. So sort of, I always say have about six months of your spending in an emergency fund, at least your essential spending, so you can keep the lights on and keep feeding yourself. Vacation you can maybe skip for six months. And then step number two is American protected foreign bonds. EMB is the one I would look at there. Again, obviously, none of those financial advice you're going to come to your indecisions. And then step number three is the big companies. VCH, VCSH is one there. We also talked about LQD for more income. And they pay you sort of 4.4 to 5.0%. And then you've got the junk bonds, they pay you about 6.5% at the top, but a lot more risk, obviously. And then step number five at the bottom here is uh the tax-free thing, which is if you are if you're a higher income earner in the US and you've got money sitting in a savings account, please look at this. Please talk to your tax advisor about this because I think it's a I think it's a very smart idea. So let me leave you with a picture

Two Engine Portfolio Mindset

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here. Most regular investors are a plane with just one of the engines on. And that one engine is being fueled by stocks and growth, right? Buy this ticker, hope it goes up. Um, one engine, one bet. If the stock market drops, you've got nothing else keeping you up in the air and you're you're kind of suffering. The big money investors, the pros, typically have two engines. Engine one is stocks growth, and engine two is bonds, interest income. And they can work quite nicely together. When the stocks drop, the bonds often go up. When growth stalls, interest rates keep paying you money. And for the last 15 years, engine two was dead. Interest rates were at zero. Everybody forgot about it. Nobody understands this anymore. But the Fed has just rebuilt that engine. It's running at the highest power in 15 years. The big money investors have noticed it, and they've moved $300 billion in six months into it. They're locking in interest while the regular guys out there are still flying on one engine on the on the AI hopium. So I'm not saying sell all your stocks. I'm saying having zero interest-paying investments right now is like flying a plane or one engine when you've got two available. So think about maybe turning on that second engine. So you've got the game plan, you've got the risk award staircase, you understand why some investments bounce around more than others, you know how to actually check what your money is doing, and then you're probably ahead of 95% investors

Live Training Invite And Closing

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already. But the biggest thing, and even the best interest strategy in the world can't save you if you don't know when to get out. The biggest losses don't come from bad investments. They come from good investments you hold for too long. A stock that was up 40% that quietly became minus 20, minus 30, and so on. The winner you loved that bled your account while you waited for it to come back and, you know, discount average interest and in all sort of madness that gets thrown around with half knowledge. The big money investors just sold tech stocks. They moved into interest. They have a rule when to sell. Ask yourself honestly if you do have one. And if you don't really have a clear one, come and join us at when to sell.org this Saturday. It's free. Grab your free ticket. It's going to be live. You can hold me, ask me questions. And you will know by the end of it when to hold, when to fold, uh, when to walk away. Um there is no replay for these. So show up live if you care to learn. If you if you don't, that's also okay. And if this video has taught you something, share it with one or two people. You might benefit from it, or just share when to sell.org with people. I generally appreciate that if you share that on your on your social media because it's how we reach more people, make a bigger impact, which is really what the the whole purpose of this is. I wish you all the best and great success.