Ask HN: How to prosper under negative interest rates?

A savings account at 0% doesn't build wealth, but it didn't really do that 3 months ago at 1.5%. Personal loans at 9% aren't much better than loans at 11%.

If you're not planning on making a career out of doing something finance-related, I'd say there isn't much to do differently.

My one recommendation would be to hedge a little against the possibility of asset bubbles. I'm not saying bet on them (I don't know if they'll happen, nor can I predict the future and time them). Rather, I'm saying try not to be in a bad spot if they happen, because easy money definitely increases the chance we could see one. As an example, everyone in this life needs a roof over their head, so if you don't own anything real estate related, a bubble in real estate prices is a risk. A homeowner who plans to stay in their house 20 more years doesn't have to care about annual changes in the real estate market...but a renter does. So own your home if it makes sense for your situation, or consider having money in REITs, or own a rental property. Don't over-extend yourself, but try to avoid needing a tulip and not having one in 1636.

Likewise, if you are relying on investments to retire, and are many years away from doing so, make sure a significant portion is in boring sp500/total stock market etfs. If your time horizon is long enough, not being able to buy stocks at a decent price is a bigger threat to your retirement than a short term drop, so make sure you have some amount of money in the market while the market isn't at all time highs.

As always, it depends on your situation and I'm not qualified to tell you what to do with your finances.

1) 0% may feel like a threshold, but it's not that quantitatively different from the sub 2% interest rate environment we've been living in for many years from a wealth generation standpoint.

2) Should you stop saving? If you mean should you be generating more cash that you spend, the answer is that's probably a good idea unless you have a pressing cash need now. If by saving you mean putting your money in a Savings Account, then yeah there are probably better uses of your capital since most pay effectively 0% interest.

3) So where should you put it? This depends a lot on your tolerance for risk, and your forecast for how quickly you might need the cash. If you need it soon and/or have a low appetite for risk, then go for safer, less volatile assets like treasuries or CDs. If you have a bit of time and risk tolerance, stocks have pulled back considerably so buying in at depressed prices and waiting for the recovery might be a good idea. Real estate is probably similar depending on where you live. If you really want to swing for the fences, go ahead and start a business, although ultimately there are a million factors that will determine your success before the interest rate environment will.

4) Should you take out debt to buy even more assets than you could with my own cash? Maybe, this all depends on your risk tolerance. If your investment decisions are good, you will reap even more returns. But if they are are bad, you will have to pay back the debt after incurring losses. So it just pushes your outcomes towards the extremes. You probably should not do this solely because interest rates are low.

A final note-- your approach to wealth generation shouldn't change based on interest rates. I think your upbringing is mostly correct, if you work diligently and spend less than you make, you will be on a road to building wealth.

The question is what to invest your free cash flow in, and the answer is almost always: all of these options. Diversifying is the best way to minimize unsystemic investment risk.

The question is then: how do you allocate your capital between risky and safe assets? That depends on the interest rates, your near to medium term cash requirements, your risk tolerance, and your age. That said, a rule of thumb is to do (100 - age)% in riskier investments, and your age% in safer investments.

Doing better than average comes with risk. If you're even asking this question, you can afford risk. Few would even think to "build [multiple] businesses", much less start with the assumption of access to venture capital.

So if you want risk aversion, you can do the same thing you've always done: put your money in a broad index fund and trust that the markets will recover well before you retire. The fact that they've always done so eventually is not proof that they will this time, but nobody can give you advice for the black swan event of markets failing perfectly. In that case you'll have worse things to worry about than your 401k.

If you want to take a risk from the Fed giving out free money... well, those negative interest rates aren't available to consumers. For example, mortgage rates are actually going up because so many see this as a signal to refinance. That money is mostly going to the bond market, because it's the last line of defense for the government. From there it goes to the stock market, where it's going to sustain an unsustainable boom. (Despite what I said earlier, the market as a whole is almost certainly overpriced, and even the earlier fall didn't fully correct it.)

Basically, the Fed free money isn't for you. It's about the government and a few financial firms, and your 401k's tiny piece of that. All you can do is muddle along the same way you always did. Go ahead and start a business or buy somebody else's, if you've got the free cash -- and it sounds like you do. You'll probably lose it, because most fail. But that's how one does better than average.