22 ms·
So, where are they putting in the money. Reading the article, it is not very clear, but it looks like there a slight shift from Savings Accounts to Money Market
by ab_testing 3y ago
So, where are they putting in the money. Reading the article, it is not very clear, but it looks like there a slight shift from Savings Accounts to Money Market Accounts. In the end, I think it is just shuffling money between banks. Nobody is stuffing their money in the mattress anymore.
- hgsgm 3y ago"people moving money to higher interest accounts now that those have returned" is not a clickworthy headline.
- deleted 3y ago[deleted]
- deleted 3y ago[deleted]
- lifeonlars 3y agoThere are much higher rates available for brokered deposits via Raisin or Zinspilot. These are also with banks. They're just less well-known banks and not typically in the countries which have the most and richest savers.
- ChuckNorris89 3y ago>So, where are they putting in the money. Mostly real estate that can be bought in cash without a mortgage. Everything that's under 300k seems to be bought instantly in cash and put on the market for rent. In case you wonder why real estate prices haven't dropped significantly in Europe that's why. The demands is still high and many people with inherited wealth are still liquid enough.
- itsoktocry 3y ago>Mostly real estate that can be bought in cash without a mortgage. So then where are the sellers putting their cash? This is a closed system.
- jtbayly 3y agoSeller probably keeps some cash but also probably takes a substantial portion of the money and pays off debt with it. At least for a lot of sales, this would happen.
- ChuckNorris89 3y agoDepends why they're selling the property. Every seller has a different motivation.
- quacksilver 3y agoProbably paying the bank back for money borrowed for the mortgage, bigger house, elderly/senior care service, being distributed as part of an inheritance, used to pay off debts or as part of a divorce settlement. Or something else - people sell houses for lots of reasons.
- oblio 3y ago> In case you wonder why real estate prices haven't dropped significantly in Europe that's why. For sure there is a slowdown and some markets are dropping (Sweden, Luxembourg).
- zer0tonin 3y agoIt's not like Luxembourg is full of houses below 300k tho
- subsubzero 3y agoyeah its not clear but that seems to be the case. Meanwhile in the US I am getting 4.5% of a few high interest savings accounts I have open, I am not sure if these options are available to Europeans but if they are there are banks that are paying really good interest rates. That being said the major US banks are offering absurdly low interest rates and I just use them for a checking account and nothing else.
- toomuchtodo 3y agoEuropeans can get exposure to dollar interest rates but that brings along currency risk between USD and EUR.
- ChuckNorris89 3y ago>Meanwhile in the US I am getting 4.5% of a few high interest savings accounts I have open, I am not sure if these options are available to Europeans They aren't. In my Euro area the highest interests on savings accounts I can find at banks is 2,5% and that's as a special offer for new customers. We in Europe are being fleeced from all sides, while banks, energy, real estate, food companies are having their most profitable quarters ever. Something's gotta change.
- throwaway60607 3y agoMy European savings account has 6% interest. Not EUR though.
- sdfghswe 3y ago
- madaxe_again 3y agoIn my case, equities. It makes zero sense for me to have money sat in a bank account earning 0.75% (3.5% below base - it’s the best savings account my bank in the U.K. offers) when I’m paying 6.5% on my mortgage with the same bank. Rather than pay off the mortgage with a stiff penalty based on current rates, I’ve stuck it in equities and funds, where at least the yield will be better than a kick in the goolies, which is the best most banks offer.
- cjrp 3y agoJust a note that you can usually overpay the mortgage each year up to a certain percentage of the balance (mine’s 10%) without incurring any penalty.
- itsoktocry 3y ago>I’ve stuck it in equities and funds, where at least the yield will be better than a kick in the goolies, which is the best most banks offer. Highly liquid money market ETFs[0] are paying ~5%, that's hard to beat with minimal risk. Individual equities are..not doing so well. [0] https://www.purposeinvest.com/funds/purpose-high-interest-savings-fund https://www.purposeinvest.com/funds/purpose-high-interest-sa...
- blibble 3y ago> It makes zero sense for me to have money sat in a bank account earning 0.75% (3.5% below base - it’s the best savings account my bank in the U.K. offers) this is more of a lazyman tax than anything else there are instant access savings accounts offering 3.5% and if you lock it up for a year you can get 5%
- theonlybutlet 3y agoNot in Europe. I live in Ireland, the longer the term the lower the return. Counterintuitive but it's the case. https://personalbanking.bankofireland.com/app/uploads/Customer-Rate-Sheet.pdf https://personalbanking.bankofireland.com/app/uploads/Custom...
- 3y ago
- huhtenberg 3y agoStocks dividends are now in 5-10% range, e.g. Verizon is at 7%. Obviously, markets are volatile and are in "search of direction", but quite a few dividend-paying stocks are trading at near 5-10 year low, so picking them up is not that much of a gamble if your investment horizon is long.
- TrapLord_Rhodo 3y agoyeah, I always DCA into a bunch of ETF's but this was the first month i ever 'picked my stocks'. Most mining companys are in distressed range because alot of metals and materials are at all time lows. They also have great P/E ratios because of the slump. For instance, Albemarle has a revenue jump of 119% YOY% with a 33% Profit margin. but it's trading four time book value. That's insane to me. It has tech company growth, but since the price of lith is at all time lows investors are scared. Even with lith at this price, they are making a huge margin and are scaling up production. But if you beleive Lith will be in short supply in the future, it's a great opportunity.
- loeg 3y agoStocks, even blue chip ones, have a very different risk profile from money in the bank.
- bee_rider 3y agoProbably not going to keep up with inflation vs definitely not going to keep up with inflation?
- lotsofpulp 3y agoI would say stocks (index funds) probably will keep up with inflation (due to implicit government bailout guarantees) and “money in the bank” (or even government debt) will not keep up with inflation due to explicit government promise to continuously reduce purchasing power of the currency.
- unmole 3y ago3 Month US T-bills are above 5% and much closer to money in the bank than picking random stocks.
- robotresearcher 3y agoParagraphs 6-10 of the article are entirely about the new popularity of money market accounts and the reasons for it.
- skippyboxedhero 3y agoECB monetary policy was a huge factor in this. When they started QE, the effectiveness was heavily limited by the small size of the securities market relative to the broader banking sector (this is why they did TRLTOs and things you didn't see elsewhere). So international borrowers started issuing in EUR realising that the ECB would buy their debt, and this has only accelerated now that US rates are rising (it has also led to massive growth in private credit and other extremely inadvisable products). The problem with this is that it isn't possible for the EU to suddenly have US-style, open financial markets where savers get paid a fair amount. It undermines the system of pensions, undermines the heavy corporatism, it undermines the whole economic model of most of Europe (even countries like Italy that have larger financial markets, it is largely due to the needs of govt finance...their govt debt cannot be financed without extraction from domestic savers...this becomes impossible if they have options).
- Eisenstein 3y agoSeems like a decent deal trading stable pensions and government services for losing the ability for a few percent of your population to use financial markets to expand their wealth constantly.
- ASinclair 3y ago> In the end, I think it is just shuffling money between banks. I don't think so. As I understand it moving into a Money Market Fund means a bank can't loan out your deposit anymore. Think investing in a Vanguard Money Market Mutual Fund like VMFXX. Vanguard can't loan those funds out.
- flerchin 3y agoBut what's the Mutual fund doing with the money? Presumably chasing yield in CDs and the like. Isn't that putting money back into a bank?
- jcfrei 3y agoMost money market funds will only invest in very safe and short term debt - ie. government debt. So the money ends up again in a bank - but usually that's one of the big commercial banks or the central bank.
- rahimnathwani 3y ago> Vanguard can't loan those funds out. Yes it can, and that's the point of a money market fund. Money market funds invest in short-term debt securities. That's a mechanism for lending money.
- saurik 3y agoI think the point is they aren't loaning it out to random people or companies, they are instead only loaning it out to the government to get something approximating the risk-free rate. You then use your quasi-riskless money market fund as a way to balance the risk of your investment portfolio.
- ASinclair 3y agoYea. The point I was trying to make is the bank is losing that liquidity. It doesn't have your deposits to loan out since you directly loaned them out in the form of things like Treasuries. That is a problem for the banks and why the article says Europeans are "draining billions from banks."
- skippyboxedhero 3y agoAs the article explains, MMFs in the EU are very small relative to deposits. Competition in the EU is limited because of the important political role that banks play (if people do move their money en masse out of banks, it will have political consequences as well as economic...there would be no option but to bail everyone out).
- theonlybutlet 3y agoBasically it's why bother with a money market fund earning 0.5% when your capital up to €100k is guaranteed at 0% interest. 0.5% is simply not worth the risk.
- morsch 3y agoThe mmf offering of my bank is covered by the public depositors insurance. It's also more like 1% interest, and other (similarly covered) banks have better rates. Still not a lot, obviously.
- lxgr 3y agoIf you're getting 0% on a (significant amount) bank deposit in the EU today, you need to urgently switch banks.
- 1970-01-01 3y ago>Nobody is stuffing their money in the mattress anymore. If you have the floor space, getting a high-quality fireproof safe and bolting it into concrete is a very wise investment. Keeping a stash of cash in it is far from stupid.
- GalenErso 3y agoUntil you forget the combination.
- f1shy 3y agoCall LPL
- fumar 3y agoWhat if the cash loses its value?
- jstarfish 3y agoIt's safer in the bank. At least you defer dealing with thieves to someone else. Indian communities around me were getting hit hard by home invasions and robbery some years ago once it became known that they hold and trade large amounts of gold in their homes. Money attracts thieves like food attracts bears. Store it somewhere away from yourself. Besides, no safe is fireproof. At best they are fire-resistant. Good luck getting to your money while your house is burning (lol) or after it collapses.
- samstave 3y agoBut some safes are Reddit proof when discovered during remodels. - The reason they don’t want AI open to the internet (and public) is how easily one can identify money laundering and stock/real estate fraud.
- oblio 3y ago> The reason they don’t want AI open to the internet (and public) is how easily one can identify money laundering and stock/real estate fraud. What do you mean?
- samstave 3y agoSpeaking of “shuffling money btwn banks” The most important banking scandal was LIBOR. They killed that scandal quicker than OWS
- a_subsystem 3y agoGold, ideally. It's the best store of value and has been for centuries.
- pirate787 3y agoBitcoin is similar to stuffing money in a mattress. It doesn't pay an interest rate and you're funding the multibillion mining industry, so in many ways its worse than a mattress.
- agilob 3y agoWell, I decided that having saving accounts that have interest of 1.2%-8% (GBP, EUR, PLN) isn't really worth it with such inflation 11-18%, so decided to fuck up years of savings and put all money into mortgage overpayments.
- balderdash 3y agoHuh? What’s your mortgage rate? 20%?
- thebruce87m 3y agoI did the same. My mortgage rate is low, but putting in £20k just reduced my monthly payment from £910 to £720. I see the benefit straight away on the next payment. I would put in another £20k but I would be charged a fee so I’ll wait until next year. It will allow me to pay more into my pension and claim 20% higher rate tax relief back on that too.
- seydor 3y agoA lot of it is going in real estate, as if it is not expensive enough already