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Ahab McBathsalts
OTD Windmill Administrator




Registered: 11/25/02
Posts: 35,107
Loc: Wind Turbine, AB
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Where can you put your savings? 2
#26845559 - 07/26/20 06:12 AM (3 years, 6 months ago) |
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At zero percent interest rates around the world, where do you put your savings?
I had a high-income savings account I kept topped up with a a little bit in case of an unexpected financial emergency, but at 0.1% - 0.5% does it even make sense? I would imagine part of the current stock rebound and bubble is directly correlated with the hunt for yield. An emergency fund is generally an insurance bet rather than an investment, and insurance costs you rather builds wealth.
If my emergency fund was usually $10,000 for example, would it make sense to take $9,000 and keep it in cash for a rainy day, and put the remainder in a utility or telecom or something with a 5% yield.
1000 x .05 = 50 9,000 x .005 = 45
So you almost get to 1%.
Or do you dump 10% of it in gold, 10% in a utility and the rest in cash?
Or do you just eat the shit sandwich and say there is no yield right now, so I'll just earn nothing on that 10k for the next 4 years or whatever and fuck it. This isn't my primary investing account, it is just a generally liquid savings account in case I'll need it. Although I am thinking about buying a house and this account might grow fairly large over the next 4 years getting eaten by inflation.
How is Money Matters handling their savings accounts in a ZIRP world?
-------------------- "Nobody exists on purpose. Nobody belongs anywhere. Everybody's going to die."
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Ahab McBathsalts
OTD Windmill Administrator




Registered: 11/25/02
Posts: 35,107
Loc: Wind Turbine, AB
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My bank offers principal protected notes, which is just a GIC (or CD) and some 5 year long dated call options on a basket of large cap funds. I've bought a few as an alternative to bonds. You are betting on long term inflation of stock prices and they've done reasonably well over the short term, but the amount is locked in for 5 years and isn't liquid.
-------------------- "Nobody exists on purpose. Nobody belongs anywhere. Everybody's going to die."
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Hobbyist
Citizen


Registered: 08/15/10
Posts: 805
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right now the silver to gold value ratio is super skewed. Buy silver, then when the ratio normalizes, convert (some of)it to gold. Doing this can have a very beneficial impact. Not only do they hold their value through inflation, but since silver is much more volatile, you can trade it back and forth for gold when the ratios are skewed. It was recently something near 120:1 and historically it's true value is something like 50:1. so it's super undervalued compared to gold. If you wait till that swings the other way you can capitalize on the market volatility while very safely making money.
FDIC only has the funds to cover like 1.5% of the value they insure so if there's a capital crisis, your money's gone. The governments are devaluing their currency due to the current "crisis" so something like precious metals is your best bet. What good is that CD if when you cash it in you need a wheelbarrow full of money to buy a loaf of bread?
-------------------- Everything i say is completely hypothetical...
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Ahab McBathsalts
OTD Windmill Administrator




Registered: 11/25/02
Posts: 35,107
Loc: Wind Turbine, AB
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Re: Where can you put your savings? [Re: Hobbyist]
#26845598 - 07/26/20 07:03 AM (3 years, 6 months ago) |
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The primary goal of this account is liquidity, not absolute returns. Although I like gold and have a good amount of it, I am looking for cash, or cash alternatives with a yield near inflation.
-------------------- "Nobody exists on purpose. Nobody belongs anywhere. Everybody's going to die."
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Hobbyist
Citizen


Registered: 08/15/10
Posts: 805
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You can still use gold as currency, though retailers may not accept it.
You're likely to find more and more places to spend/exchange it though if currency devaluation continues.
-------------------- Everything i say is completely hypothetical...
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Brian Jones
Club 27



Registered: 12/18/12
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I think "do you just eat the shit sandwich" describes the situation well. Safe places to park money have had depressing to think about interest rates for a long time, even with low inflation.
Around 2005 I had an internet savings account that payed 5%. I just opened one with Credit Karma that's just above .5% and with no minimums/no fees that's a good one now.
-------------------- "The Rolling Stones will break up over Brian Jones' dead body" John Lennon I don't want no commies in my car. No Christians either. The worst thing about corruption is that it works so well,
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geokills
∙∙∙∙☼ º¿° ☼∙∙∙∙


Registered: 05/08/01
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I've been thinking about this post for a while, but I have no good answers. Far from low risk, I keep a relatively minimal amount of actual cash available for emergencies, as my various lines of work provide redundant cash flow that is able to service my typical expense loads. The rest of my "savings" goes into higher risk areas, because saving these days is really just value erosion. I'm sure you know that I've been fond of cryptocurrency, as it has become increasingly liquid, although it is far from stable. But I do use it as a liquid parking spot, and have pulled from those accounts on a couple of occasions for major purchases such as an automobile.
Probably not the sort of risk you would want to take with money you're stashing away for a home though. My wife and I already bagged our primary residence, owned free and clear, so I'm comfortable taking on additional risk with what would otherwise be my more conservative savings.
Separate from crypto, longer term savings get parked in precious metals (gold, silver and palladium) and unsecured peer-to-peer lending notes which have averaged 5-6% yield over the 10+ years I've been using them. I have halted reinvestment into the P2P notes however, due to general concerns about the economy as a result of the coronavirus fallout and its potential effect on the ability to service debt.
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-------------------- ┼ ··∙ long live the shroomery ∙·· ┼ ...╬π╥ ╥π╬...
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Ahab McBathsalts
OTD Windmill Administrator




Registered: 11/25/02
Posts: 35,107
Loc: Wind Turbine, AB
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Re: Where can you put your savings? [Re: geokills]
#26852465 - 07/29/20 06:55 PM (3 years, 5 months ago) |
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Thanks for your input. I think most investors and especially retirees around the world are grappling with the same problem.
-------------------- "Nobody exists on purpose. Nobody belongs anywhere. Everybody's going to die."
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ManianFH
living in perverty



Registered: 07/06/04
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What have you heard about Trust Deeds? Essentially scoping out borrowers for home loans and loaning them the money at a high return rate, in the 10-13% range?
I have considered doing this but maybe the same as above due to the pandemic this might be a poor place to park ones cash, should a bunch of borrowers be unable to pay their debts. However I would think getting into them 4-6 months from now, you are probably past the group of insolvent borrowers.
-------------------- notapillow said: "you are going about this endeavor all wrong. clear your mind of useless fear and concern. buy the ticket, take the ride, and all that.... " ChrisWho said: "It's all about the journey, not the destination."
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Le0n
Stranger
Registered: 08/17/20
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Re: Where can you put your savings? [Re: ManianFH]
#26885199 - 08/17/20 04:00 PM (3 years, 5 months ago) |
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S&P 500, duh. Even Warren Buffet says this and he doesn't want poor old grandmas to loose their shirt. The US economy should keep growing according to him.
I'd invest in stocks but I'm pretty good at that, and it's highly not recommended for most people. You'd be lucky to outperform the S&P 500.
Quote:
Ahab McBathsalts said: The primary goal of this account is liquidity, not absolute returns. Although I like gold and have a good amount of it, I am looking for cash, or cash alternatives with a yield near inflation.
10% average per year bro, and you can sell it for cash same day. Just a couple clicks.
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Brian Jones
Club 27



Registered: 12/18/12
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Re: Where can you put your savings? [Re: Le0n]
#26886284 - 08/18/20 08:37 AM (3 years, 5 months ago) |
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It's no longer 10% average (Vanguard says to expect about 6% in the coming years) and the average doesn't reflect what's going to happen in the next 12 months.
I was going to put this in a separate post, but here it is. CNBC said that on Friday Warren Buffet sold 3.6 billion dollars worth of JP Morgan and 2.2 Billion of Wells Fargo. Actually those were the values of the shares at the close of trading, and he no doubt roiled the prices.
-------------------- "The Rolling Stones will break up over Brian Jones' dead body" John Lennon I don't want no commies in my car. No Christians either. The worst thing about corruption is that it works so well,
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Asante
Mage


Registered: 02/06/02
Posts: 86,795
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Re: Where can you put your savings? [Re: Le0n]
#26886784 - 08/18/20 01:33 PM (3 years, 5 months ago) |
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Quote:
Le0n said: S&P 500, duh. Even Warren Buffet says this and he doesn't want poor old grandmas to loose their shirt. The US economy should keep growing according to him.
I'd invest in stocks but I'm pretty good at that, and it's highly not recommended for most people. You'd be lucky to outperform the S&P 500.
Quote:
Ahab McBathsalts said: The primary goal of this account is liquidity, not absolute returns. Although I like gold and have a good amount of it, I am looking for cash, or cash alternatives with a yield near inflation.
10% average per year bro, and you can sell it for cash same day. Just a couple clicks.
I believe the US economy is going down the shitter in the foreseeable future, but crystal ball aside, an S&P 500 Index Fund or S&P 500 ETF has always been a very rewarding investment.
Like our well informed n00b le0n remarks, for most its hard to beat a consistent annual 10%.
-------------------- Omnicyclion.org higher knowledge starts here
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