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Why Investors Need To Get Comfortable With Low Interest Rates And Dividend Stocks

Introduction

The term "lower for longer" has been coined by the financial media to describe the most recent period of low interest rates over the last 6 years. It was unthinkable 6 years ago that today, 6 years later, the 10 year Treasury Bond rate would be sitting at about 1.5%. Because the income from bonds and other interest bearing investments is paltry, investors are turning more and more towards investments in dividend paying stocks and limited partnerships. I had previously been squarely in the camp that believes we would see interest rates increase toward a more typical (or normalized) level driven by GDP growth, employment growth, wage growth, and healthy inflation. Over the last year I have read through dozens of articles including a number on economic history, taught a class in economics and investing, and given this subject a lot of thought. As a result, my thinking has evolved to an alternate possibility. The US and much of the developed world may very well see interest rates low for very much longer, possibly decades.

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