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Ask HN: How to prosper under negative interest rates?

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Re: Ask HN: How to prosper under negative interest rates?

#161

Post by mancerayder »

OrangeMango wrote: post #147
mancerayder wrote: post #88

Earlier quoted context omitted.

I just sold a home days before the pandemic hit, and consider myself very lucky. But now I have cash and I'm nervous inflation might start becoming a real problem. I'm also worried that dense American cities are going to have a huge drop in property values, desirability, and an increase in crime. I am seeing this right now, and a lot of sentiment from people with money is to never come back. It's a tough call. Is thi…

> Crime is spiking in NYC right now and it's not really a priority to report it. How can you know this? If it is not being reported, you must be relying on anecdotal reporting? Reddit, nextdoor, facebook?

Anecdotal - Citizen App blowing up, in several neighborhoods I know well. A large number of street robberies, gunshots heard. Unusual events, like a deadly assault during the afternoon in an area that never happened.

Before the pandemic crime had spiked for certain things, like misdemeanor assaults and robberies, I want to say 20+ percent. The politicians use Major Crimes, because it makes them look better as they go down and you can also make them go down by downgrading indictments or pushing people who report crimes so it's filed differently (if you've been the victim of robbery they'll do everything to lower the value of the items, as one example). But you can view CompStat data from before the pandemic. DAs accused the NYPD of exaggerating but DAs had already begun to decline to prosecute. Also the discovery rules just got more strict.

Now logic for the present moment: a large percentage of the NYPD is out sick, a lot of people have no income and there's no one in the street. Would you feel safe? There are regular strongarm and knife-point robberies reported on Citizen near where I live.

Re: Ask HN: How to prosper under negative interest rates?

#162

Post by SketchySeaBeast »

xchaotic wrote: post #136
SketchySeaBeast wrote: post #61

Earlier quoted context omitted.

My parents retired a year ago. If they'd kept all their money in the stock market until this month they'd be in a lot of trouble, and probably will be for the foreseeable future - how is that not a gamble? "You need to diversify" would be an argument against gambling in the stock market, and getting into something safer.

You need to rebalance your portfolio as you get closer to retirement as you can’t time the market. I think by the time you’re retirement age, your portfolio should be 30% equities

Would you say that you should put it into safer things, maybe gamble with it less?

Re: Ask HN: How to prosper under negative interest rates?

#163

Post by amiga_500 »

nemonemo wrote: post #53
al_chemist wrote: post #31

Earlier quoted context omitted.

> You don't build wealth by saving. You do it by investing using leverage. For some reason, this sounds like "you don't build wealth by saving. You do it by lottery and scratchcards!"

That is not true. There are nearly risk-free methods of making investment returns, and when the upside is small but risk is minimal, leverage is the way to amplify the upside. Playing lottery means high risk of losing money and that is not an investment, though the line may seem blurry. (Some turn lottery into a reasonable investment, so it is truly blurry.)

> There are nearly risk-free methods of making investment returns

This is a problem. The "risk free returns" are state enabled rentier schemes. They are not only "risk free", they are also "effort free".

If someone is taking a free ride they are a rentier.

If you have a lot of these people, overall living standards tank.

If it becomes the only paradigm that people can imagine making a difference, you are on the road to total collapse.

Re: Ask HN: How to prosper under negative interest rates?

#164

Post by dnadler »

tomp wrote: post #153
qeternity wrote: post #8

You have to look at real rates, not nominal rates. The only markets that have negative nominal rates are battling deflation (which the US is not) or have serious liquidity concerns at the moment. The Fed is unlikely to go negative as they face a very different beast. Here's a quick example. Let's say you're in a deflationary environment: in 1 year, your money actually buys you more than it did last year, let's say fo…

Good explanation. Also wrong. Denmark has a negative interest rate [1] but has had a (positive) inflation for a while [2]. [1] https://en.wikipedia.org/wiki/List_of_countries_by_central_b... [2] https://data.worldbank.org/indicator/FP.CPI.TOTL.ZG?location...

This doesn't mean that the OP was wrong, but that the negative interest rate policy successfully prevented deflation.

Re: Ask HN: How to prosper under negative interest rates?

#165

Post by amiga_500 »

abstractbarista wrote: post #66
Ididntdothis wrote: post #52

Earlier quoted context omitted.

Ten years ago a lot of people learned that housing is not as safe as they thought.

It actually is. You just can't be over-leveraged. The bank will give you waaayy more money than should ever responsibly be taken. Combined with emergency savings, you are quite safe as a homeowner.

And how do you bid in a market where every house has >1 bidder and banks are lending waaayy more than is responsible?

Re: Ask HN: How to prosper under negative interest rates?

#166

Post by marcus_holmes »

mancerayder wrote: post #89
marcus_holmes wrote: post #70

Earlier quoted context omitted.

I used to own a house. Now I rent. The ability to walk away from the obligations that house-owning involve is worth a lot of money to me. I probably lose financially, maybe, but meanwhile I get to have a much better standard of living.

Ditto. And in this crisis, they're suspending evictions and presumably suspending mortgage payments too. I feel very lucky to have gotten out of that chain. Now I'm renting and fairly comfortable compared to the much larger structure I used to own which included land (now I'm in a one bedroom condo). I just wish I could drill a pull-up bar and TV articulating arm into the wall. However, I'm able to rent and live in a…

I recently moved to Berlin, and the whole rental market here is awesome. Rent controls mean the rents aren't huge (but they are rising because of the high demand). But the amazing thing (to someone from UK/Australia anyway) is that I can repaint, make alterations, drill holes in the walls, etc. I might have to put it back the way it was at the end, but the landlord can't stop me from doing what I like to the place while I'm here. A whole different attitude to renting.

Re: Ask HN: How to prosper under negative interest rates?

#167

Post by amiga_500 »

pjc50 wrote: post #47

> I was brought up to work diligently, not take on debt, and save - a simple approach to building wealth This basically doesn't build wealth, it builds a pile of money which you can draw down in the future. Not nothing and good to have at the base of a pension, but once you've gone beyond the basics it doesn't do much. It's mere deferred consumption, it's not making anything. Now you have to face three problems: - th…

> there are people out there with many orders of magnitude more money than you. They don't know what to do with it either.

Because more fiat tokens have been created than actual wealth has been created. Something has to give on that.

Re: Ask HN: How to prosper under negative interest rates?

#169

Post by jcomis »

tarsinge wrote: post #135
shawnz wrote: post #105

Earlier quoted context omitted.

> That said, it's very hard to time the market, so the best strategy is to put your money in over time. One good way to do this is to take a set amount of money from each paycheck and invest it every pay period, regardless of what the market is at. If you have a bunch of money sitting in savings right now, maybe divide it into 52 parts (or 104 or 156 or even 208 depending on your risk tolerance and/or thoughts on how…

Is timing the market always wrong though? I don't feel like I made a bad deal selling one month ago and now re-entering DCA. It was obvious that the US market was not correctly pricing this pandemic. I think there is a middle ground between day trading and never touching anything.

Basically you got lucky this time. Generally it's not good advice.

Re: Ask HN: How to prosper under negative interest rates?

#170

Post by thehappypm »

1-more wrote: post #141
orky56 wrote: post #132

Earlier quoted context omitted.

How is it predatory? The person who is renting likely does not have the ability to purchase and you adding another rental to the market drives rental prices down and provides another rental option (albeit insignificantly) thereby helping said renter.

At the end I get a condo and the renter gets nothing, that's just so backwards to me.

They get shelter.
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