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They could also think about investing their excess money for some real returns.

gjs278 5y ago
they should not be forced to invest their money in a massively over-leveraged peak stock market that could crash any second. I think it’s fair to be able to cash in your chips at any point and not have to pay a fee for that every single year.
blitzar 5y ago
Which is the behaviour the negative interest rate policy is intended to encourage. The article also fails to mention that bank deposits are only gauranteed up to 100k as well, so if you have a bunch of cash sitting around it is wise to spread it around different institutions anyway.
- monkeydust 5y ago
  Makes sense. In UK it's GBP 85k for single account, double if joint. Current best instant access rate is around 0.65%.
- iainmerrick 5y ago
  Which is the behaviour the negative interest rate policy is intended to encourage. I’ve never quite understood -- can’t the bank do that for you? If the obstacle is that savings accounts are expected to have a guaranteed rate with zero risk, the banks ought to provide very easy access to investment accounts, with the ability to move money around frictionlessly. Is there just no demand for that kind of service, or regulatory problems, or something of that kind? Edit to add: I always felt that offset mortgages (https://en.wikipedia.org/wiki/Flexible_mortgage#Offset_mortgages https://en.wikipedia.org/wiki/Flexible_mortgage#Offset_mortg...) were a nice solution to this problem; it gives you a place to stash your savings and get a reasonable rate of return (basically matching your mortgage rate) while still being accessible if needed. But they seem to have gone out of fashion again, at least in the UK. Anyone know if there was some problem or disadvantage (either to consumers or to the banks)?
  - blitzar 5y ago
    > I’ve never quite understood -- can’t the bank do that for you? You want them to tell you you have a fixed, gauranteed rate of return and use it to buy some apple stock or some bitcoin with it? The answer is they can do it for you, they do, do it for you, but you have to sign up for the gambling account not the instant access cash savings account.
    - iainmerrick 5y ago
      Well... yes, sort of! Or at least, it’d be great if the bank let you choose how much money to put in a safe account with low but guaranteed interest, and how much in an investment account with higher but risky interest; and make it really easy to move money back and forth. I don’t know of any bank that offers anything like that. I guess there ought to be some safeguards, e.g. at least XX% of your money in a safe place. But there’s a point at which safeguards become friction that just stop you investing at all. For example, in the UK you have ISA accounts, which should work like that, but the restrictions are so annoying (yearly cap on deposits) and the benefits so weak (tax exempt, but on a pitiful interest rate so it makes no difference for most people) that they’re not very useful. Unless I’m missing something.
      - blitzar 5y ago
        Natwest.com ... Products: Bank Accounts, Mortgages, Savings, Investments, Loans ... Your investment options are limited to actual investments basically, so essensially shares. Term deposits dont seem to be a big thing in the UK for whatever reason, and we dont have the US tax breaks to buy municipal bonds etc. ISA's are great, you can go buy some apple stock or some FTSE funds or depending on the provider one of 1000's of funds with it. 'Cash ISAs' while rare are still around are no better or worse than a savings account (IMO).
        iainmerrick 5y ago
        Yes, I was thinking of cash ISAs, which do seem a bit pointless. This is a good nudge for me to look around for better/easier options to store petty cash in, so I’m going to do that. Thanks!
ArnoVW 5y ago
Perhaps they need the money liquid? Or the risk reward ratio is not good? Or they don't have a CFO that can do treasury and the opportunity cost / effort is not worth it?
- traceroute66 5y ago
  > Or they don't have a CFO that can do treasury and the opportunity cost / effort is not worth it? What's the CFO going to do when Eurobonds are negative too ? Converting it un-necessarily into another currency introduces exposure to forex risk. "Investing", aside from the risk, is not cash or cash-equivalent, so that's out of the question. Hence the best answer is generally just splitting out into multiple Euro bank accounts.
  - blitzar 5y ago
    Investors want their business growth and a 10 bagger (or bust) on their money, not paying a c-suite salary for 0.01% interest, or worse, a bunch of greek bonds that someone on the sales desk at Goldmans said was a great buy.
emiliobumachar 5y ago
Small entrepreneurs typically have more much more risk exposure than average already.
TomVDB 5y ago
How do you want a savings bank to invest? Government bonds? Corporate bonds? Stocks? Crypto? Are you willing to cover their potential losses with government guarantees? Savings accounts are supposed to be a safe storage of money. They have certain insurance guarantees because of that. Encouraging banks to use that money to speculate is exactly what you don’t want them to do. Savings banks are not known to employ the most brilliant investment minds.

they should not be forced to invest their money in a massively over-leveraged peak stock market that could crash any second. I think it’s fair to be able to cash in your chips at any point and not have to pay a fee for that every single year.

blitzar 5y ago

Which is the behaviour the negative interest rate policy is intended to encourage. The article also fails to mention that bank deposits are only gauranteed up to 100k as well, so if you have a bunch of cash sitting around it is wise to spread it around different institutions anyway.

monkeydust 5y ago
Makes sense. In UK it's GBP 85k for single account, double if joint. Current best instant access rate is around 0.65%.
iainmerrick 5y ago
Which is the behaviour the negative interest rate policy is intended to encourage. I’ve never quite understood -- can’t the bank do that for you? If the obstacle is that savings accounts are expected to have a guaranteed rate with zero risk, the banks ought to provide very easy access to investment accounts, with the ability to move money around frictionlessly. Is there just no demand for that kind of service, or regulatory problems, or something of that kind? Edit to add: I always felt that offset mortgages (https://en.wikipedia.org/wiki/Flexible_mortgage#Offset_mortgages https://en.wikipedia.org/wiki/Flexible_mortgage#Offset_mortg...) were a nice solution to this problem; it gives you a place to stash your savings and get a reasonable rate of return (basically matching your mortgage rate) while still being accessible if needed. But they seem to have gone out of fashion again, at least in the UK. Anyone know if there was some problem or disadvantage (either to consumers or to the banks)?
- blitzar 5y ago
  > I’ve never quite understood -- can’t the bank do that for you? You want them to tell you you have a fixed, gauranteed rate of return and use it to buy some apple stock or some bitcoin with it? The answer is they can do it for you, they do, do it for you, but you have to sign up for the gambling account not the instant access cash savings account.
  - iainmerrick 5y ago
    Well... yes, sort of! Or at least, it’d be great if the bank let you choose how much money to put in a safe account with low but guaranteed interest, and how much in an investment account with higher but risky interest; and make it really easy to move money back and forth. I don’t know of any bank that offers anything like that. I guess there ought to be some safeguards, e.g. at least XX% of your money in a safe place. But there’s a point at which safeguards become friction that just stop you investing at all. For example, in the UK you have ISA accounts, which should work like that, but the restrictions are so annoying (yearly cap on deposits) and the benefits so weak (tax exempt, but on a pitiful interest rate so it makes no difference for most people) that they’re not very useful. Unless I’m missing something.
    - blitzar 5y ago
      Natwest.com ... Products: Bank Accounts, Mortgages, Savings, Investments, Loans ... Your investment options are limited to actual investments basically, so essensially shares. Term deposits dont seem to be a big thing in the UK for whatever reason, and we dont have the US tax breaks to buy municipal bonds etc. ISA's are great, you can go buy some apple stock or some FTSE funds or depending on the provider one of 1000's of funds with it. 'Cash ISAs' while rare are still around are no better or worse than a savings account (IMO).
      - iainmerrick 5y ago
        Yes, I was thinking of cash ISAs, which do seem a bit pointless. This is a good nudge for me to look around for better/easier options to store petty cash in, so I’m going to do that. Thanks!

ArnoVW 5y ago

Perhaps they need the money liquid? Or the risk reward ratio is not good? Or they don't have a CFO that can do treasury and the opportunity cost / effort is not worth it?

traceroute66 5y ago
> Or they don't have a CFO that can do treasury and the opportunity cost / effort is not worth it? What's the CFO going to do when Eurobonds are negative too ? Converting it un-necessarily into another currency introduces exposure to forex risk. "Investing", aside from the risk, is not cash or cash-equivalent, so that's out of the question. Hence the best answer is generally just splitting out into multiple Euro bank accounts.
- blitzar 5y ago
  Investors want their business growth and a 10 bagger (or bust) on their money, not paying a c-suite salary for 0.01% interest, or worse, a bunch of greek bonds that someone on the sales desk at Goldmans said was a great buy.

emiliobumachar 5y ago

Small entrepreneurs typically have more much more risk exposure than average already.

TomVDB 5y ago

How do you want a savings bank to invest? Government bonds? Corporate bonds? Stocks? Crypto? Are you willing to cover their potential losses with government guarantees? Savings accounts are supposed to be a safe storage of money. They have certain insurance guarantees because of that. Encouraging banks to use that money to speculate is exactly what you don’t want them to do. Savings banks are not known to employ the most brilliant investment minds.