Negative Bank Interest Rates Are Coming - What should one do?

manwonder wrote:

We are already in a close to 0% interest rate environment for the last few years, which eventually is going to turn to -ve rates very soon...how does this affect your retirement plans & what should one do to protect ones nest egg?...
Investments,gold are one way or just
withdraw cash (USD) & hold or do you expect a round of 'deflation' that appears to be happening in some countries?
The very well heeled will be enjoying these 'good' times being able to borrow cheap money (maybe not as yet in the philippines) & speculate and make a killing at the expense of milliions of our mom & pop generation where there life savings are slowly being ripped apart.
Saw this youtube clip that reflects the pain that many retirees are facing.
Any feedback will be appreciated.

https://www.youtube.com/watch?v=t6m49vN … ture=share

Negative rates is nothing new to Europe, the Europe Central Bank had negative interest rates in June 2014. People in Cyprus with less than 100,000 Euro's in their account had 6.75% of their savings confiscated and those with more than 100,000 had 9.9 %. confiscated.

Just look at your savings account interest almost nothing.

As manwonder said this is a benefit for well heeled, but most well heeled may not have to finance a house or auto.

But on the other hand home mortgages are as low as 2.75% and VA 2.25% in the US giving home ownership available to millions of people. There is no better investment than real estate over the life of a mortgage.

Auto loans  from Bank of America as as 2.69%. My credit card has dropped down into the high 7% range.

The housing & auto industry are having a boom in sales. What that converts to in the future is a better economy with support industries hiring workers and producing more GNP.

Low interest rates is a two edge sword, be on the right side.

Enzyte Bob wrote:

manwonder wrote:

We are already in a close to 0% interest rate environment for the last few years, which eventually is going to turn to -ve rates very soon...how does this affect your retirement plans & what should one do to protect ones nest egg?...
Investments,gold are one way or just
withdraw cash (USD) & hold or do you expect a round of 'deflation' that appears to be happening in some countries?
The very well heeled will be enjoying these 'good' times being able to borrow cheap money (maybe not as yet in the philippines) & speculate and make a killing at the expense of milliions of our mom & pop generation where there life savings are slowly being ripped apart.
Saw this youtube clip that reflects the pain that many retirees are facing.
Any feedback will be appreciated.

https://www.youtube.com/watch?v=t6m49vN … ture=share

Negative rates is nothing new to Europe, the Europe Central Bank had negative interest rates in June 2014. People in Cyprus with less than 100,000 Euro's in their account had 6.75% of their savings confiscated and those with more than 100,000 had 9.9 %. confiscated.

Just look at your savings account interest almost nothing.

As manwonder said this is a benefit for well heeled, but most well heeled may not have to finance a house or auto.

But on the other hand home mortgages are as low as 2.75% and VA 2.25% in the US giving home ownership available to millions of people. There is no better investment than real estate over the life of a mortgage.

Auto loans  from Bank of America as as 2.69%. My credit card has dropped down into the high 7% range.

The housing & auto industry are having a boom in sales. What that converts to in the future is a better economy with support industries hiring workers and producing more GNP.

Low interest rates is a two edge sword, be on the right side.

Tough call...what if deflation of asset prices takes hold...as it is already seen happening in some countries & their respective govts are seen scrambling to prevent this by offering near like you say 2% or lower interest rate loans to keep the party going.

manwonder wrote:

Enzyte Bob wrote:

manwonder wrote:

We are already in a close to 0% interest rate environment for the last few years, which eventually is going to turn to -ve rates very soon...how does this affect your retirement plans & what should one do to protect ones nest egg?...
Investments,gold are one way or just
withdraw cash (USD) & hold or do you expect a round of 'deflation' that appears to be happening in some countries?
The very well heeled will be enjoying these 'good' times being able to borrow cheap money (maybe not as yet in the philippines) & speculate and make a killing at the expense of milliions of our mom & pop generation where there life savings are slowly being ripped apart.
Saw this youtube clip that reflects the pain that many retirees are facing.
Any feedback will be appreciated.

https://www.youtube.com/watch?v=t6m49vN … ture=share

Negative rates is nothing new to Europe, the Europe Central Bank had negative interest rates in June 2014. People in Cyprus with less than 100,000 Euro's in their account had 6.75% of their savings confiscated and those with more than 100,000 had 9.9 %. confiscated.

Just look at your savings account interest almost nothing.

As manwonder said this is a benefit for well heeled, but most well heeled may not have to finance a house or auto.

But on the other hand home mortgages are as low as 2.75% and VA 2.25% in the US giving home ownership available to millions of people. There is no better investment than real estate over the life of a mortgage.

Auto loans  from Bank of America as as 2.69%. My credit card has dropped down into the high 7% range.

The housing & auto industry are having a boom in sales. What that converts to in the future is a better economy with support industries hiring workers and producing more GNP.



Low interest rates is a two edge sword, be on the right side.

Tough call...what if deflation of asset prices takes hold...as it is already happening in some countries & respective govts are seen scrambling to prevent this & instead prop up markets.

I guess it depends on how much money you have in the bank and which country.

The Chinese must believe in the stability of the US dollar. The Chinese have invested more than $150 billion in the US. In 2016 they made fifty investments over $50 million each. The also hold more than a Trillion Dollars in US Treasury Securities.

I've dropped 130K on my superannuation, 3 months ago it was getting up to 205K but slowly correcting, I think the thing for me is I don't need it and eventually in say 3 to 4 years if I decide to draw a pension it will hopefully be better,,,,,,, it's just a paper loss. I have largish funds stuck in a couple of term deposits from the sale of our house in Oz and getting a "whopping" 1.35% and 1.65%, by next month that will probably drop further. We have surplus cash in regular bank accounts both here and Oz, probably I originally calculated for 3 to 4 years living but now??? Probably 5 to 6 years living.
The reason for that is we don't travel far so fuel savings, restaurant savings, needless purchases, no internal or external holidays, no or few renovations due to C-19 limitations and we have lowered the bar with previous expectations getting inline with the new norm.

Negative interests rates, something I have never seen but is relative, I said this in another post. "Swings and merry go rounds"

I really feel for those in all countries that live week to week/month to month and 30 years ago I would have been in that situation.
I also, living here see the resilience of the Filipino people tightening their belts but also helping each other,,,,,,,,,, a far cry from what and how I grew up in a western country.

We all (well us older people) have seen interest rates at 20% borrowing to where we are now and ride the tide we do. We still have a long way to go with this,,,,,, years and have to have patience and in the mean time deal with a sad situation while watching global power/economics form the new norm. Humans adapt very well.

Sorry for the long winded post but as always.

OMO

Cheers, Steve.

bigpearl wrote:

We all (well us older people) have seen interest rates at 20% borrowing to where we are now and ride the tide we do.
Cheers, Steve.

You just brought up and old memory for me. Yes, 20% interest back around the Carter years. Back then I was getting very good tax returns. If you owe money to the IRS and don't file tax returns, they finally get around and find you, charging interest and penalties.

(Note  filing after three years you forfeit any tax return you may be entitled to.)

I did not file tax for several years when the interest rate was about 20%. If you overpaid your taxes there is no penalty for filing late. When I did file just before the three years, the IRS paid me the refund plus the  going interest rate on the refunds.

For private individuals, if rates drop below 0%, we are better off withdrawing the cash and saving it under our mattresses, or for security in a safety beposit box. A rush to do that would see a run on the banks and a collapse of the financial system.

Biggest risk are with things like pension funds and other investments, whos management is with financial bodies and not in the hands of individuals.

Steve

Tax is an annual responsibility and those too slack at times miss opportunities. I have always met my obligations and observe at times lucrative situations, paid my taxes annually and guess what? Winding up my family trust and company netted us AU 35K after accounting, legal and ASIC fees. As my dear old departed dad told me many times "if you look after the cents the dollars look after themselves" as well as "penny wise pound foolish" old school.
In saying all this don't worry I have paid plenty of taxes to prop up those that don't/can't.
My better half here in PH. tells me that because he earn't under the threshold he doesn't need to file a tax return,,,,,,,,, 10+ years on paying taxes,,,,,,,,, OMO but he can't be bothered, not a good scenario for a Filipino citizen believing that he doesn't need to conform to current protocols and be legitimate, perhaps get a 10 or 100K return for all the years worked, go figure.

Interest rates here?  I feel very sorry for the Filipino's that go this path given a 5 to 8% discrepancy with world markets, no homework, desperation.

Cheers, Steve.

BTW I already said OMO.

It's always in my thinking.  Cash is king.

Yes, hard to find good returns unless you have some decent assets to begin with and can risk losing some of it to chase higher returns. I'm pretty much out of that game. I washed rental cars to put myself through college and prefer not to have to do that again, lol.. Those of us in the boomer generation were fortunate to come of age in a time of economic expansion - reasonable college and healthcare costs, good salaries and benefits, regular wage increases, etc. I really feel for the younger generations and those who were not as fortunate, or had misfortune and are living paycheck to paycheck, life can be really rough in that situation and you're one illness away from being on the street. Here in Philippines of course it is always like that for the poor.

Best to live simply as Steve mentions, and do what one can to help those around us who are in need. I can't take it with me and It doesn't take much to make a significant difference - occasional dental and health visits, rabies shots, a burial expense, or a hospital bill. Without some of these basics the poor often die young here. She just lost a childhood friend to a thyroid disease at age 40 who apparently couldn't afford the medication. So sad.

Most of my small assistance is health related, but last year I bought a refrigerator for her sister-in-law (brother died of cancer), and I just bought another brother an ocean fishing net so he can fish after losing his job due to covid. These relatively small things make a big difference in their lives, and not one of her family members has *ever* asked for help - I just find out about it and do something if I can.

In the Philippines, as in all third world countries there are always more needs that can be met and we can only do what we can to try and make their life a little better.  May God bless these people for their ability to carry on the way they do.

You are a kind person.  Thanks God.

Thank you Richard. I wish I could do more.

Richard Yan wrote:

It's always in my thinking.  Cash is king.

How much can ones mattress/safe hold, perhaps another bedroom or another safe? While cash is king the reality eventually strikes home for the future/return on cash/investments. How we live now and plan for an unseeable future, investments are long term wether in a safe or prospecting. Even if it's only
1%. today it's better than 2 bob and a bottle of beer.

OMO.

Cheers, Steve.

pnwcyclist wrote:

Yes, hard to find good returns unless you have some decent assets to begin with and can risk losing some of it to chase higher returns. I'm pretty much out of that game. I washed rental cars to put myself through college and prefer not to have to do that again, lol.. Those of us in the boomer generation were fortunate to come of age in a time of economic expansion - reasonable college and healthcare costs, good salaries and benefits, regular wage increases, etc. I really feel for the younger generations and those who were not as fortunate, or had misfortune and are living paycheck to paycheck, life can be really rough in that situation and you're one illness away from being on the street. Here in Philippines of course it is always like that for the poor.

Best to live simply as Steve mentions, and do what one can to help those around us who are in need. I can't take it with me and It doesn't take much to make a significant difference - occasional dental and health visits, rabies shots, a burial expense, or a hospital bill. Without some of these basics the poor often die young here. She just lost a childhood friend to a thyroid disease at age 40 who apparently couldn't afford the medication. So sad.

Most of my small assistance is health related, but last year I bought a refrigerator for her sister-in-law (brother died of cancer), and I just bought another brother an ocean fishing net so he can fish after losing his job due to covid. These relatively small things make a big difference in their lives, and not one of her family members has *ever* asked for help - I just find out about it and do something if I can.

In the Philippines, as in all third world countries there are always more needs that can be met and we can only do what we can to try and make their life a little better.  May God bless these people for their ability to carry on the way they do.

Always sensed you were real, a nice guy, a positive attitude/thinker and may I say a sunny disposition especially given our current situation. No negatives and wise opinions, not blowing smoke up your a*se but that is who you are and one day it would be a privilege to meet you.
Given all our current situations it is nice to see a genuine contributor here showing reality and a hell of a lot of humility for those of us that lost/forgot why we chose to live here.
5 stars pnwc.

Cheers, Steve.

bigpearl wrote:

Richard Yan wrote:

It's always in my thinking.  Cash is king.

How much can ones mattress/safe hold, perhaps another bedroom or another safe? While cash is king the reality eventually strikes home for the future/return on cash/investments. How we live now and plan for an unseeable future, investments are long term wether in a safe or prospecting. Even if it's only
1%. today it's better than 2 bob and a bottle of beer.

OMO.

Cheers, Steve.

Valid point... In a cheap money (low interest environment) this would appear to be a great time to get some of it in hand & use it to leap into the world of certain carefully planed investments especially if signs of deflation start setting in maybe next 6months to a year...I don't see banks here/overseas willing to give low interest credit lines to us even though in my case I have a decent savings acct/Insurance/Pension & a perfect credit worthiness rating....they however will glady do so if you do intend to buy an *overpriced/overinflated asset
which I stay far away from.
If that was possible I could help not only myself but many other local family members who have fallen into tough times.
The distribution of  'cheap money' has catches to keep some party going which I don't want to be a part of.

Omo

Hi Steve.  Not all banks the same as this time.  If there is a run??

Richard, how high can your bed/mattress go or your second bedroom in a 24M2  apartment apartment if you have that luxury with a balcony Better to place your cash wisely,,,,, as said even if it's 1%.
Daily needs for the next 6 to 12 months under the mattress.

OMO.

Cheers, Steve.

bigpearl wrote:

Yes, 5 stars pnwc.
Cheers, Steve.

Agreed

bigpearl wrote:

Richard, how high can your bed/mattress go or your second bedroom in a 24M2  apartment apartment if you have that luxury with a balcony Better to place your cash wisely,,,,, as said even if it's 1%.
Daily needs for the next 6 to 12 months under the mattress.

OMO.

Cheers, Steve.

Btw.. those studios may have very high ceilings which easily can fit a double/triple bunk bed with loads of room to spare.
Again its not quantity its quality....Singapore has those special  'purple notes' that are easily tucked away in small spaces.

MW, pnwc is a thinker and all of us especially myself could take a leaf out of his book and prosper. Succinct and poignant (shit happens here and all over) to life here where we live but at the same time offering  alternative views/takes of global situations and honestly? What we do here for our life, our partners life and the ones we care about is reiterated by the likes of pnwc very succinctly and subtly at times but always rings the bell

OMO.

Cheers, Steve.

manwonder wrote:

bigpearl wrote:

Richard, how high can your bed/mattress go or your second bedroom in a 24M2  apartment apartment if you have that luxury with a balcony Better to place your cash wisely,,,,, as said even if it's 1%.
Daily needs for the next 6 to 12 months under the mattress.

OMO.

Cheers, Steve.

Btw.. those studios may have very high ceilings which easily can fit a double/triple bunk bed with loads of room to spare.
Again its not quantity its quality....Singapore has those special  'purple notes' that are easily tucked away in small spaces.

And (never start a sentence with and) our safe is full for a few years cash, personally I like my bed without lumps and weather the oncoming storms we do through careful panning.

Cheers, Steve.

bigpearl wrote:

manwonder wrote:

bigpearl wrote:

Richard, how high can your bed/mattress go or your second bedroom in a 24M2  apartment apartment if you have that luxury with a balcony Better to place your cash wisely,,,,, as said even if it's 1%.
Daily needs for the next 6 to 12 months under the mattress.

OMO.

Cheers, Steve.

Btw.. those studios may have very high ceilings which easily can fit a double/triple bunk bed with loads of room to spare.
Again its not quantity its quality....Singapore has those special  'purple notes' that are easily tucked away in small spaces.

And (never start a sentence with and) our safe is full for a few years cash, personally I like my bed without lumps and weather the oncoming storms we do through careful panning.

Cheers, Steve.

Thanks Steve...somehow I don't really get to sleep peacefully these days....Lucky if I do get 4-5hrs complete undisturbed sleep....the mind keeps cranking as if I have things left undone...not sure why or what...maybe as you mentioned its me thinking/preparing for the oncoming storm which appears its going to be brutal.
Omo

Thanks for your kind words Steve. Would love to meet up someday and chat over a cold one. We're all doing the best we can to live a good life and make a difference, I believe. One thing I have learned from my woman is to be grateful for each day we have and live without fear. It is more in their way of thinking than mine, which always involves too much analysis. But I still like to be prepared, lol.

Cheers,
John

I am strongly anti-religious but my "motto" is   Every day upright and breathing is a good day, any day I have made someone laugh is not a wasted day. May everyone live long and prosper.

For people who are worried about negative interest rates and using banks, research crypto currency. I keep 40% of my funds in diffirent types of crypto. The government can cry all day. Without my wallet keys, they'll never be able to touch my funds.