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U.S. interest rates have soared everywhere but savings accounts

bloomberg.com

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Re: U.S. interest rates have soared everywhere but savings accounts

#321

Post by _ink_ »

azth wrote: post #40

Serious question: inflation seems to only be getting higher (is it 8%+ now?) the Fed's increasing of the interest rate is causing a stock market crash. So if one puts their money into assets, those are decreasing in price due to the fed, and if someone is holding cash that's also going down in value due to inflation. What's the solution?

If you live in America and just want to protect your buying power against inflation: buy I-bonds. You cannot sell them for a year and can only buy 10k per year. But they pay interest roughly the same than inflation. For us plebs from the rest of the world without access to I-bonds I have no idea.

Re: U.S. interest rates have soared everywhere but savings accounts

#322

Post by quintushoratius »

emptysongglass wrote: post #307
twblalock wrote: post #256

After one year, I-bonds are pretty similar to savings accounts and they are indexed to inflation. Your money won't grow, but it won't shrink either -- and as Treasury bonds they are the lowest-risk investment that exists. If you buy some today, they will pay 7.12% for the next 6 months. After that they will probably be adjusted to pay even more, based on the current inflation rate. There are two major catches: you ha…

Are there I-bond equivalents for us in Denmark? Watching my cash idly burn is not my idea of a good time.

I believe you can still purchase them. You're just loaning money to, and benefitting, the US government rather than your own.

Re: U.S. interest rates have soared everywhere but savings accounts

#323

Post by j7ake »

twblalock wrote: post #256

After one year, I-bonds are pretty similar to savings accounts and they are indexed to inflation. Your money won't grow, but it won't shrink either -- and as Treasury bonds they are the lowest-risk investment that exists. If you buy some today, they will pay 7.12% for the next 6 months. After that they will probably be adjusted to pay even more, based on the current inflation rate. There are two major catches: you ha…

How does one purchase I bonds outside of the USA ?

Re: U.S. interest rates have soared everywhere but savings accounts

#324

Post by mrep »

TimJRobinson wrote: post #310
BayAreaEscapee wrote: post #189

Earlier quoted context omitted.

The obvious problem is that there is nowhere to hide. All markets are overvalued by virtually any historical metric. At least if you take the -6% real hit, at least you can know and predict what the hit is.

You can fairly easily get a safe 10% (20% in bullish times) return on USD in crypto markets. Still high because most people haven't figured it out yet and there isn't good enough regulation for institutions.

"safe" https://rekt.news/leaderboard/

Re: U.S. interest rates have soared everywhere but savings accounts

#325

Post by jason0597 »

mise_en_place wrote: post #196
BayAreaEscapee wrote: post #189

Earlier quoted context omitted.

The obvious problem is that there is nowhere to hide. All markets are overvalued by virtually any historical metric. At least if you take the -6% real hit, at least you can know and predict what the hit is.

My portfolio with foreign value stocks and gold and silver mining stocks, plus oil companies is doing great. I am up by more than 10%. This is just the beginning for them. My financial advisor who manages the vast majority of my wealth is down 2% in comparison. I'm close to pulling my money because he's extremely anti commodities and I had to yell at him to invest my money into mining companies because he thinks it's…

How much wealth would one even have to warrant having a financial advisor? And also, aren't they a waste of money most of the time? Their function can be reduced to flowcharts you get from Reddit a lot of the time

Re: U.S. interest rates have soared everywhere but savings accounts

#326

Post by shukantpal »

deanmoriarty wrote: post #283
quickthrowman wrote: post #168

Earlier quoted context omitted.

Yes treasuries are liquid, but a 100 bps rise in yield in a 10y bond means the face value is 10% less. Duration risk is (bps yield increase * years) where 100 bps is 1%. Duration risk matters a lot less with the shorter dates issues.

If interest rates went up 10% (hypothetical, I understand it won’t happen), what would the face value of an existing 10y bond be?

Approximately drop by 50% if existing rates are near zero. That's because a 10% yield will double your money when a 10y bond matures. So existing bonds have to halve to double your money in the same way.

Re: U.S. interest rates have soared everywhere but savings accounts

#327

Post by micromacrofoot »

dragonwriter wrote: post #255
micromacrofoot wrote: post #254

Earlier quoted context omitted.

“trickle” doesn’t even sound good, I don’t think anyone could possibly be fooled by this, it was always a sham

“trickle down” wasn't what proponents called it, it's something a comedian called it derogatorily that stuck. Ditto “voodoo economics”, except the critic wasn't a comedian, but a politician (of the party that rejected the criticism and went whole hog on the policy, but still later nominated him as, and got him elected, President.)

ah ha, that makes a lot for sense, thanks

Re: U.S. interest rates have soared everywhere but savings accounts

#328

Post by smilebot »

mgh2 wrote: post #252
cheriot wrote: post #244

SoFi is offering 1.25% but Vanguard's short term treasury fund (VGSH) is at 2.35% if you're ok with mild capital risk.

Be careful of Sofi, like so many IPOed to raise money from covid, their stock tumbled ~-60% YTD: https://www.google.com/search?q=sofi+stock&oq=sofi+stock&aqs... Founder's sexual misconduct: https://en.wikipedia.org/wiki/Mike_Cagney It is a known sales tactic to hook in customers betting that the hassle to switch later will keep them loyal. The 1.25% rate is if you set up direct deposit, with a $300 bonus. https://www…

I guess the thing to learn from this is always keep shopping for a better deal?

Re: U.S. interest rates have soared everywhere but savings accounts

#329

Post by [deleted] »

cbhl wrote: post #281
everybodyknows wrote: post #280

Earlier quoted context omitted.

For anyone who filed a 4868, and expects a refund, note that up to $5000 of it can be claimed in the form of paper I-bonds. This limit is independent of the $10000 online bond limit. There is a nuisance factor in that some portion will be delivered in small denominations -- down to $50. If you're using TurboTax, the necessary checkbox is well hidden. Look for a "more options" tab or some such, IIRC.

This seems like oddly-timed tax advice -- the filing deadline (without extensions) was Apr 18 and today is Apr 23.

[deleted]

Re: U.S. interest rates have soared everywhere but savings accounts

#330

Post by exabrial »

clairity wrote: post #129
gdurham wrote: post #77

The issue is that there is no incentive for banks to increase interest rates on accounts as they are already sitting on too much cash. Banks make money by lending money out, in times where banks are strapped for cash on hand, you will see interest rates increase. I don’t see this changing in the near future.

> "...there is no incentive for banks to increase interest rates on accounts as they are already sitting on too much cash." and folks wonder why banks are so strictly regulated... no, banks are never sitting on too much cash unless they've made a marketing and/or an operational error. most banks are highly levered, meaning they're lending out, say, 10× the cash they hold, so they never "have too much cash on hand". q…

> I'd rather go back to a simpler form where banks were only allowed to make money on the spread between lending and savings rates, making them boring and having to compete (with higher savings rates, for example) for your business

I'm truly interested in what's happening now and why this _is not_ the case. Can you elaborate on what they're doing now to make now, rather than making on the spread?

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