What's in store for you:

1. Photo From My Life
2. Financial Thought: Treasury Yields
3. Life Thought: Brent Beshore & Smaller Tables:
4. Good Sh*t: Magna-Tiles

Photo From My Life:

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Financial Thought:

Treasury Yields: Treasury yields have been creeping higher lately and it got me thinking. If someone offered you a guaranteed 4.7% return from the U.S. government for the next 10 years, would you take it?

Ten years ago, this wouldn’t have been a particularly interesting question. Today, it feels different. Everyone seems to think the market can't possibly go higher. Earning nearly 5% annually from an asset that many consider the closest thing to “risk-free” is pretty wild.

Obviously, every investment choice is highly personal and you shouldn't make any investment decision by just reading this newsletter.

For me, I still have a long time horizon and I’m comfortable taking additional risk in pursuit of higher returns. Historically, equities have delivered better long-term outcomes, even if the ride is much bumpier along the way.

However, I’ve also come to appreciate why a 4.7% Treasury might be incredibly attractive for certain people. If you’re retired, approaching retirement, managing a large cash reserve, or simply have no desire to deal with market volatility, locking in a known return for a decade starts to look pretty appealing.

Of course, there are some important caveats here.

1. Inflation matters. A 4.7% nominal return feels great until inflation averages 3-4% for the next decade. Your real purchasing power growth could end up being much lower than it appears on paper. I should probably write about TIPS too which are an inflation protected bond, but with a few nuances.
2. There’s reinvestment and opportunity cost risk. If stocks compound at a much higher rate over the next 10 years, you’ll likely look back wishing you had taken more risk.

The nerd in me is fascinated about how how these yields change financial planning assumptions. For years, many plans relied on bonds earning 2-3% and equities earning 7-10%. If you believe that inflation will remain constant, it’s worth pressure testing your plan using something closer to 5% on bond allocations and 7% on equities.

I know a guaranteed 5% return isn't going to generate the same excitement as stocks, private equity, or the latest investment trend. But there's a chance that a decade from now, investors will look back and realize that locking in nearly 5% yields was one of the more attractive opportunities available.

Life Thought:

Brent Beshore & Smaller Tables: One of my favorite writers is Brent Beshore.

Brent is the founder of Permanent Equity, a long-term investment firm that buys great businesses with no intention of selling them. Similar to me, he shares his thoughts on business and investing, but he also writes about bigger questions like family, relationships, purpose, and what it means to live a good life.

His recent essay, Bigger Houses, Smaller Tables, and Lonelier Lives, was one of the better things I've read in a while.

I'd encourage you to read it, but everyone's busy so here's the TLDR. As our homes have gotten larger, our lives have become more private. We have bigger backyards, taller fences, more entertainment options inside our homes, and fewer reasons to regularly gather around a table with friends, neighbors, and family. As a result, many of us have more space than ever before and less community than ever before.

His argument is that relationships require proximity, repetition, and intentionality. Strong communities don’t happen by accident. They are built through continual interactions. Stopping by unannounced, borrowing a tool, sharing a meal, watching each other’s kids, or sitting on a porch talking about nothing in particular.

As I read the piece, I couldn’t help but think about Northern Michigan.

Many of my wife and my deepest friendships were built there. We operate with an open-door policy. Friends don’t need an invitation. They know where the drinks are. Kids bounce between houses often stealing cookies or bowls of cereal. If someone starts an activity, word tends to spread quickly and others gather.

Our relationships have flourished there because it's the same eople consistently sshowingup in each other’s lives..

As adults, especially with young kids and busy careers, it’s easy to become isolated. Our calendars fill up, but is it filled up how we want to fill it up? Brent’s essay was a good reminder that community is something we have to actively create.

So what's the takeaway? We should all be inviting another family over for dinner, even when the house isn’t perfectly clean. Or, maybe we need to become the friend that just opens up someone's fridge without asking.

Good Sh*t:

Magna-Tiles: We were gifted a set of Magna-Tiles ~2 years ago and they're still one of our most-used toys. My son and I love building castles, rocket ships, parking garages, planes, or really anything his creative mind comes up with.

They’re marketed as a kids toy, but I’m convinced they’re just as much an adult toy.It's one of the few activities that can hold my attention for 10-20 minutes without any urge to grab my phone and start doomscrolling.

If you have young kids, they’re an easy recommendation. If you don’t have young kids, you may need to borrow someone else’s set before you realize how much fun they are.

Here's the set we have. I'd also recommend getting the storage box.

Disclaimer: VDB Wealth is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. Past performance is not indicative of future performance.

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