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I thought about mentioning government bonds or term deposits, but I wanted to keep the post simple. My point is that the stock market isn't always the answer.

I thought about mentioning government bonds or term deposits, but I wanted to keep the post simple. My point is that the stock market isn't always the answer. I don't know what interest rates on savings accounts look like in the US, but in the UK they're competitive with government bonds. Banks often use them as a loss-leader to sell more profitable products like credit cards and mortgages. I'm curious to know what offers a better yield than a savings account with less risk than a stock or a bond. Even the US two year note has a negative real yield right now, so it's hard to see how to get an above-inflation return without taking significant risk. The five-year inflation-linked bond has a negligible yield, and means locking away your cash for a significant time [1]. [1] https://www.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield https://www.treasury.gov/resource-center/data-chart-center/i...

uiri 10y ago
interest rates on savings accounts [...] in the UK [are] competitive with government bonds. Looking at the rates for UK government bonds, it looks like those are also below inflation (e.g 5 year yields are around 0.6%). If there were any savings accounts paying above inflation, I think exchange rates would be shifting accordingly in the absence of capital controls. I suspect that savings accounts representing a poor RoI is therefore a global phenomenon. The only thing which I can think of that the parent could be referring to is the money market. I think I'm as lost as you as to what he is getting at.
- soVeryTired 10y ago
  I'm really talking about retail savings accounts: most banks in the UK pay give 2%-3% on deposits up to a cap, with no interest paid on funds deposited above the cap. However, it's often possible to get around the cap by opening multiple accounts. You can stash amounts into the mid tens of thousands like this, but for higher values it gets a bit trickier. These are retail products. It's true that an increase in the yield on government bonds would move the exchange rate, but the kind of institutional investors that move money in enough bulk to affect an exchange rate have little interest in retail deposit accounts.
pdog 10y ago
> I'm curious to know what offers a better yield than a savings account with less risk than a stock or a bond. Why are you looking for a single, magical asset class with superior risk-adjusted returns? If you invest in a diversified portfolio of stocks, government bonds, real assets and cash, you'll find it earns a solid rate of return with less volatility.

uiri 10y ago

interest rates on savings accounts [...] in the UK [are] competitive with government bonds. Looking at the rates for UK government bonds, it looks like those are also below inflation (e.g 5 year yields are around 0.6%). If there were any savings accounts paying above inflation, I think exchange rates would be shifting accordingly in the absence of capital controls. I suspect that savings accounts representing a poor RoI is therefore a global phenomenon. The only thing which I can think of that the parent could be referring to is the money market. I think I'm as lost as you as to what he is getting at.

soVeryTired 10y ago
I'm really talking about retail savings accounts: most banks in the UK pay give 2%-3% on deposits up to a cap, with no interest paid on funds deposited above the cap. However, it's often possible to get around the cap by opening multiple accounts. You can stash amounts into the mid tens of thousands like this, but for higher values it gets a bit trickier. These are retail products. It's true that an increase in the yield on government bonds would move the exchange rate, but the kind of institutional investors that move money in enough bulk to affect an exchange rate have little interest in retail deposit accounts.

pdog 10y ago

> I'm curious to know what offers a better yield than a savings account with less risk than a stock or a bond. Why are you looking for a single, magical asset class with superior risk-adjusted returns? If you invest in a diversified portfolio of stocks, government bonds, real assets and cash, you'll find it earns a solid rate of return with less volatility.