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To those surprised by this: do you have lots of savings in regular bank accounts? Why? Why not invest it in some instrument like a 0% fee money market fund with

To those surprised by this: do you have lots of savings in regular bank accounts? Why? Why not invest it in some instrument like a 0% fee money market fund with a low yield/risk? I learned "max 2 salaries in a bank account because you are being stiffed otehrwise as the bank doesn't pay interest rate" since I was a kid. It's as much hammered into me as "keep N months salary in savings".

fridif 6y ago
How about I keep my money in the bank with 0 risk and 0 fee? Why is that not allowed? I just bought a house. Do you know how nice it was to not have to cash out investment accounts and move cash around? I just wired the cash directly, as it should be.
- selfhoster11 6y ago
  In that case, the national inflation just becomes your fee since your money loses power in real terms over time.
  - fridif 6y ago
    Denmarks currency will still inflate on top of the 1%
RobertoG 6y ago
What are those instruments? Let's say I'm only interested in keep pace with inflation with not risk. I don't know a lot of options nowadays.
- alkonaut 6y ago
  "Interest rate funds" they are called here. Unsure what the best english translation is. A fund that invests in interest rate carrying instruments like bonds. With a large diverse portfolio you get a small but steady interest similar to a savings account. It is still a fund though - not savings - so obviously there is risk involved.
csomar 6y ago
> To those surprised by this: do you have lots of savings in regular bank accounts? Why? Why not invest it in some instrument like a 0% fee money market fund with a low yield/risk? Funny world. Negative interest rates would have been unthinkable a decade ago. Yet, here we are about to normalize that savings in a bank account are not okay. > I learned "max 2 salaries in a bank account because you are being stiffed otehrwise as the bank doesn't pay interest rate" since I was a kid. It's as much hammered into me as "keep N months salary in savings". There was a time when you put your money in a savings account and the bank will pay a reasonable interest to cover inflation and give you some extra. (The power of compound interest, anyone?). People's memory are insanely short. Here is also what you might be missing: Central interest rate will gradually affect all aspects of economy and thus all investment vehicles. 0% interest means that any investment with yield will carry risk. Negative rates will mean that for society, on average, they'd be losing money on their investments.
- alkonaut 6y ago
  > the bank will pay a reasonable interest to cover inflation and give you some extra. > all investment vehicles. 0% interest means that any investment with yield will carry risk. A consumer can offload all of the risk to the bank (and the underlying guarantee, usually state), in return for most of the reward. Example: I can open a savings account with some restrictions (minimum balance, or restricted withdrawals) and since the bank is now in a better position to invest my money, they can offer me an interest rate despite central rates being 0%. For example, a $50 minimum balance but free withdrawals gives me 0.6% interest rate, with state deposit insurance. That's not "risk free" since there are other risks than that the of the bank (currency risk, not least) but it's the exact same risk as any savings account.
  - csomar 6y ago
    > A consumer can offload all of the risk to the bank There is a pattern/trend, and the banks started with a certain amount and now lowered it. If the trend carries on, it's a matter of time before what you suggest is no longer possible.
- analyst74 6y ago
razius 6y ago
> 0% fee money market fund with a low yield/risk Return free risk. It doesn't sound good to me, I give my money out for somebody else to invest and potentially lose without getting a return.
iso1210 6y ago
Investments go down as well as up has been hammered into me since I was a kid. My parents lost a lot in the 2000 crash, then 8 years later 2008 wiped out millions of people.
- alkonaut 6y ago
  Not using a short-term bank account doesn’t necessarily mean investing in something higher risk. There are savings accounts that offer real return in exchange for some restrictions (e.g minimum balance). Buying bonds or funds of bonds is also a very low risk investment of the same kind. For a lot of people repaying other debt like mortgages can be an efficient form of saving.

fridif 6y ago

How about I keep my money in the bank with 0 risk and 0 fee? Why is that not allowed? I just bought a house. Do you know how nice it was to not have to cash out investment accounts and move cash around? I just wired the cash directly, as it should be.

selfhoster11 6y ago
In that case, the national inflation just becomes your fee since your money loses power in real terms over time.
- fridif 6y ago
  Denmarks currency will still inflate on top of the 1%

RobertoG 6y ago

What are those instruments? Let's say I'm only interested in keep pace with inflation with not risk. I don't know a lot of options nowadays.

alkonaut 6y ago
"Interest rate funds" they are called here. Unsure what the best english translation is. A fund that invests in interest rate carrying instruments like bonds. With a large diverse portfolio you get a small but steady interest similar to a savings account. It is still a fund though - not savings - so obviously there is risk involved.

csomar 6y ago

> To those surprised by this: do you have lots of savings in regular bank accounts? Why? Why not invest it in some instrument like a 0% fee money market fund with a low yield/risk? Funny world. Negative interest rates would have been unthinkable a decade ago. Yet, here we are about to normalize that savings in a bank account are not okay. > I learned "max 2 salaries in a bank account because you are being stiffed otehrwise as the bank doesn't pay interest rate" since I was a kid. It's as much hammered into me as "keep N months salary in savings". There was a time when you put your money in a savings account and the bank will pay a reasonable interest to cover inflation and give you some extra. (The power of compound interest, anyone?). People's memory are insanely short. Here is also what you might be missing: Central interest rate will gradually affect all aspects of economy and thus all investment vehicles. 0% interest means that any investment with yield will carry risk. Negative rates will mean that for society, on average, they'd be losing money on their investments.

alkonaut 6y ago
> the bank will pay a reasonable interest to cover inflation and give you some extra. > all investment vehicles. 0% interest means that any investment with yield will carry risk. A consumer can offload all of the risk to the bank (and the underlying guarantee, usually state), in return for most of the reward. Example: I can open a savings account with some restrictions (minimum balance, or restricted withdrawals) and since the bank is now in a better position to invest my money, they can offer me an interest rate despite central rates being 0%. For example, a $50 minimum balance but free withdrawals gives me 0.6% interest rate, with state deposit insurance. That's not "risk free" since there are other risks than that the of the bank (currency risk, not least) but it's the exact same risk as any savings account.
- csomar 6y ago
  > A consumer can offload all of the risk to the bank There is a pattern/trend, and the banks started with a certain amount and now lowered it. If the trend carries on, it's a matter of time before what you suggest is no longer possible.
analyst74 6y ago

razius 6y ago

> 0% fee money market fund with a low yield/risk Return free risk. It doesn't sound good to me, I give my money out for somebody else to invest and potentially lose without getting a return.

iso1210 6y ago

Investments go down as well as up has been hammered into me since I was a kid. My parents lost a lot in the 2000 crash, then 8 years later 2008 wiped out millions of people.

alkonaut 6y ago
Not using a short-term bank account doesn’t necessarily mean investing in something higher risk. There are savings accounts that offer real return in exchange for some restrictions (e.g minimum balance). Buying bonds or funds of bonds is also a very low risk investment of the same kind. For a lot of people repaying other debt like mortgages can be an efficient form of saving.