5 ms·
What good is it to get the principal back in 100 years ? If inflation stays between 2 and 3%, the principal would only be worth between 5 and 13% of what it is
by golem14 3y ago
What good is it to get the principal back in 100 years ? If inflation stays between 2 and 3%, the principal would only be worth between 5 and 13% of what it is today. If inflation is between 4 and 5%, principal in 100 years would be worth between 0.7and 2% of todays value.
- vineyardmike 3y agoPeople buy annuities for the guaranteed income. That's an existing product people want. Annuities get ~5% interest, and when you die you usually forfeit the principal. It's also not FDIC insured. This CD is 4.75%, FDIC insured, and you get the principal back. It's superior to an annuity for a good chunk of people. Sure the principal degrades in post-inflation buying power (excluding the interest payments), but that's not the point because it's competing with $0.
- alexpotato 3y ago> but that's not the point because it's competing with $0. If the option is "Buy the CD or do nothing" though, correct?
- snypher 3y agoI believe it's [buy this CD, buy an annuity]
- soligern 3y agoCan you withdraw the interest penalty free before the term is up?
- vineyardmike 3y agoThe interest can either add to the principal or be a regular distribution.
- monomers 3y agoWith global population stagnating in the coming decades I wouldn't bet on inflation staying the same. I think it's more likely that we are headed into a deflationary crisis worse than 1930 Germany.
- Mat3777 3y agoHave you seen UN projections about global population increasing?
- monomers 3y agoPractically all models estimate peak population to happen somewhen in the second half of the 21. century. And most countries outside of Africa are likely to go the way of Japan far sooner.
- midoridensha 3y agoJapan's birthrate (~1.3) is about the same or only slightly worse than most Western nations. The US is about 1.6. The one that's really eye-opening is South Korea (~0.8).
- delfinom 3y agoPopulation increases in India and Africa have no impact on the economic catastrophes pending in the Western world and Asia.
- kaashif 3y agoPopulation increases in immigrant source countries have no impact on the economies of the largest immigrant destination countries?
- WeylandYutani 3y agoPopulation stagnating is what keeps everyone in my country employed even in a recession. Take a look at India or the Philippines: everyone is replaceable and life is not a scarce resource. Companies hate it though. They want cheap workers instead of competing for employees.