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Negative rates don’t mean alternatives become better investment strategies. It just moves goal posts to encourage more risk taking in the economy.
Housing looks like the best alternative investment strategy. There are funds that focus on solid rental markets, owning their housing complexes for example.
A negative interest rate is a penalty for not putting liquid capital to productive investment, regardless of wether such opportunities are at hand. To some extent, so is inflation. Negative rates don’t mean alternatives become better investment strategies. It just moves goal posts to encourage more risk taking in the economy. Housing looks like the best alternative investment strategy. There are funds that focus on s…
This is not true, and is massively dependent on many other prevailing economic forces.
This of course is not as straightforward as putting your money in a saving account. But it is also not as complicated as you might expect. You need to decide what risks you are comfortable with. How do you view the world and the markets in 5-10-20 years and do your research.
Low interest rates mean that you need more risks for the same return. It means investing a portion of your savings in emerging market bounds, corporate bounds, stocks, real estate. This of course is not as straightforward as putting your money in a saving account. But it is also not as complicated as you might expect. You need to decide what risks you are comfortable with. How do you view the world and the markets in…
I'm not a financial planner or financial services professional of any kind, so take anything I say with a grain of salt. 1) should I stop saving? No. negative interest rates won't go that negative. Even if your bank is earning -1% interest, it still makes sense to be saving. 2) Should I put my savings elsewhere? Probably. ETFs or index funds with wide stock market exposure are a good idea (good examples are SPY, VOO,…
A great way to lock in decent rates and still have the safety of a bank account is with CDs. See https://www.ally.com/bank/cd-rates/ for example, where you can get 1.45-1.55% guaranteed interest on an 18 month CD where you can pull your money out at any time without penalty. A month ago, I put money into this same CD when rates were closer to 1.9%. Now is a good time to lock this in as these rates can go lower (but if they go up, you can simply withdraw your money and reinvest).
> Venture capital money is going to tighten up a lot.
This makes it especially important to think about a path to profitability. A lot of great startups are going to go under because they won't raise the money to keep going for the next 12-18 months, even though long-term they might be great (viable) businesses
The easiest and least exciting answer is to buy treasuries now as rates have not hit rock bottom and if the crystal ball said interest rates were lower in the future, bonds bought now would raise in value just like in normal times. Someone bought a 50 year government bond in Austria I think and the interest rate moved a smidge and the value of his bond went up a whopping 50% I was laughing when greek debt was issued…
This can go the other way too. If interest rates rise a smidge, the value of these bonds can plummet.
Once the dust settles, you can invest in all sorts of safe-ish type vehicles that aren't Treasurys and still clip a coupon. High-dividend stocks such as utilities are one example, but a financial advisor can help you pick the right investment for your portfolio.
Does anyone know of any prominent economists who argue that deflation may be a good thing? I know the overwhelming consensus is that you want something like 2% or 3% inflation to ensure market growth but I'm always interested in alternative perspectives, particularly because personally I'm not convinced that you necessarily want (or need) perpetual growth.
If you don't have the time, read chapter 8 and 20, as Warren Buffett has recommended it. It might not teach you how to prosper [under negative interest rate] but I think it will give you something to work on and provide you with a good framework in investing.
I'm not a financial advisor so I cannot give you advice but I think investing in yourself is a sound advice.