Well it looks like economic growth is non-existent. China's growth story is coming to a close.
https://www.apra.gov.au/preparations-for-zero-and-negative-i…
What do you plan to do with your money as you will soon be paying for the opportunity to have your deposits held at the bank?
Stonks might be an option, but how do you know you aren't buying a Stink when the house of cards comes crashing down…
only 17 year old ones so that noone can drive it away!
2nd hand cars went up in value due to the pandemic, jokes on everyone.
Westpac investment banker played the long game.
Exactly! And stupidly so. I bought 2 spare used cars (8 years old and 5 years old) just before the pandemic in 2018 and 2019. I sold both in the last 3 months for double what I paid. Nuts I tell ya!
I could sell my Nvidia 3080 Graphic Card for double that I paid for …..
Audi is better inflation hedge
That's why midweight hedge fund managers tend to drive them a lot.
Logic wins.
woosh
XXX
leverage yourself up to the hilt in investment properties and get the bank to pay you to take money off them.
genius
can't fail
until inflation goes through the roof and/or Australia's housing market slips.
Personally i don't think it'll go negative, they've tried this in Europe before and it didn't work (people had to pay back less than their house's value),
and will only fuel the fire that is the Australian housing market sh1tstorm.
But as long as the boomer's retirement is funded who really cares?
Everything's a gamble though
Negative rates don't work. Plus we never had European tracker rates that were sold as central bank rates less x%. Even if RBA went to -2% most of us will still be paying something.
You just need to look at Japan. Negative rates means deflation. People just hold onto their cash as things get cheaper. Negative rates are a joke when you can't cut cents from notes and coins circulating.
Governments should just fix the economy. But governments have backed themselves into a corner with most of GDP based on consumer consumption of useless goods. Getting property market firing to save retail because people will buy new household goods (made in China). Only residential housing is going gang busters while rest of the economy is in the dumps.
Yeah, I don't think we have to worry about this one haha. In case you hadn't noticed, inflation is rampant. Do you honestly think that everything has been going up in price by 0.5% per year? NO WAY! The true inflation is more like 10-25%, the mixed bag that they use to gauge inflation doesn't reflect what people are buying well at all.
This is mainly because we've all just been printing money like no tomorrow. Eg. When you print to obtain double your money in a year, inflation = 100% for that year even if nothing has gone up in value at all. Simply because your money is now only worth half of what it used to be worth. Nobody else will be willing to sell the same thing to you for the same amount of AUD when there's twice as much AUD in circulation now.
Australia has printed about 15% extra cash in the last year whilst America has printed an extra 30%. That's why our dollar has become a lot stronger against theirs. Going off this simple statistic, our true inflation rate would be 15% due to the extra AUD in circulation even if everything was kept at the same price (relatively). We've printed off 5x the usual amount of money that we would typically do in a year (percentage wise), ie. 5 years worth of inflation jam packed into one year. The good news is that we've eased off on the money printing ever since the start of 2021.
The true inflation is more like 10-25%, the mixed bag that they use to gauge inflation doesn't reflect what people are buying well at all.
The index might not be representative of what everyone is buying but at least it is published. If you can substantiate your 10 - 25% as true then get it adopted as an index then please do!
Bread, pasta, vegetables hasn't been going up by 10 - 25% or at least it package weights haven't been shrinking by that much. I am not sure what kind of luxurious lifestyle that you lead. If you eat out a lot of the time or buy the newest gadgets I'd agree it might be closer to 10% but if your cost of living is going up by 25% then good luck to you.
Inflation eats away at your money that is why everyone is buying growth assets. Putting it into cash thinking negative rates is going to eat into it is probably the worst option. Whether it is Sweden, Japan or Eurozone which have / had negative central bank rates retail deposit rates may have gone to zero but not negative.
Australia has printed about 15% extra cash in the last year whilst America has printed an extra 30%.
You know the RBA cash was given to financial institutions so they can lend. You still need to be a credit worthy borrower to access the cash. I don't know anyone who's bank account increased by 15% overnight or 30% in the USA and then went on a spending spree bidding up the price of everything.
The reserve banks actually hope that inflation goes through the roof because inflation is a problem they know how to deal with.
Get as much cash out the door until inflation hit 6% then they can start ramping up interest rates again.
they've tried this in Europe before and it didn't work
You could say this about ZIRP/QE/etc yet we followed Japan, US, EU into the abyss with it. After living overseas I came to realise that Australia doesn't learn a damn thing from the position of hindsight which it enjoys from being at the end of the global supply chain. They will go NIRP, bank on it (without cash)
APRA has already been preparing the banks for it https://www.macrobusiness.com.au/2021/07/apra-to-banks-get-r…
Australia doesn't learn a damn thing from the position of hindsight
We're the lucky country. Not the smart country.
QE is NIRP if you think about it. It is just you can't go negative without trying something else. Negative sends a signal things are worst than they are. In Sweden they found people just saved more not less.
There is a theory that interest rates are relative. If RBA stayed at 3% the AUD would go through the roof making all our agricultural products, anything we produce and tourism uncompetitive. RBA is just following rest of the world's central banks to keep the AUD at constant trading range to other currencies to not destroy industry.
On the flip side housing boom is just smashing everyone locally haven't big repayments. When backs the RBA into corner on increasing rates.
Inflation is better for Real Estate, as long as you have a fixed loan.
Move from offset account to repay loan.
Has it ever happened to retail bank customers?
but if interest rates are negative, banks would be paying us to have a loan
sadly not how it works, banks loan money to make money, if they won't make money they won't loan you anything, Your loan interest rates aren't set by the RBA, they are set by your bank. Rates could be -1 or -2%, you would still be paying interest. The only way you might not is if the government or RBA were paying/funding the banks to provide the negative interest rate loans. In the end banks are businesses, they aren't giving you anything for free.
Exactly this! People forget that it's all a business transaction, if it doesn't make dollars it doesn't make sense and the bank won't proceed. For all existing loans, they will simply keep the rate profitable for them. The only reason they lower rates at all is to compete with other banks.
If you want to earn at a rate higher than the cash rate, you need to take on risk. Stonks are high risk/high return. Other investments like term deposits are lower risk/lower return (but higher than cash rate).
If you're thinking of just holding cash to avoid the negative return - how much is it going to cost you in time/money/stress to hold such a large amount of cash? Is that worth more than a small negative interest rate?
Example?
Insider trading for one…
@jv: You take on the risk of being caught and going to jail. Actually quite higher risk than just losing some money.
@DingoBilly: Call yourself the government and launder money through grants instead. It’s just called pork barrelling.
Places to Store Cash Safely if Rates Go Negative
I'll look after it for you.
you're already negative
and highly charged…
Lose a proton, or gain an electron?
You should be charged.
well i invested in australian unity diversified property fund and got a nice little bonus today, they sold a building for a profit and gave us a bonus. I got 3000. But I dont know if they plan to do any more bonuses. They invest in shopping centres etc and own the buildings, and the income comes from rents etc. One property alone they own was valued recently at 100m. When I bought in dec the units cost 1.06. Today about 1,15 but went up to 1.20 recently. Just came down to 1,15. I expect. it to go back up There is also a monthly dividend.
You better check your superfund, they might have been the buyers.
I dont have any super or property, this is it. I was not prepared to settle for1 per cent bank interest so I took a chance after checking that they own stuff as security.
Australian Super just announced over 20% return for 2020/21. Other funds are likely to be close to that, incl AU, noting these high figures relate to the period of recovery after Covid fear shocked the market in early 2020. Earnings in super are taxed at 15%, or 0% for over 60s in pension mode. Earnings on managed funds like AU are added to your PAYG and taxed at your marginal rate. If you’re looking at long term investment, or you’re nearing retirement, look at the tax advantages of super.
@BigBirdy: The 20% gain was only for one year and it's locked in a time vault for up to 46 years. The end users have no way to liquidate the funds unless they're dying or by the grace of the government.
The end users don't own the money unless they have full control over it and can do what they want when they want.
BTW a 20% gain in 2020/21 isn't something special when compared to single assets that did >70% or other asset classes that did 800%.
@rektrading: Urr, I think I pointed out fairly clearly the 20% gain was specific to the past Covid recovery year. As for time vault up to 46 years, that might be so if Pam was only 14 years old, and your 70% and 800% returns, that isn't investing.
@BigBirdy: Amazing none of these so called experts / leeches can beat ( or get close to ) the ASX return including dividends of 27.8% for that period .
@popsiee: You can chose Australian Shares or International Shares mix in Aussie Super. Super is not always about absolute return and people should pay attention to their investment choice in their Super. I stop picking balance option because it is one of the highest fee options in Australian Super. If you are still young, just go for 100% shares market. It's proven over the long term, share market will beat everything.
@popsiee: 20% return is on their Balanced Fund, ie a diversified mix of investments that will never perform as well as the best performing sector, nor as bad as the worst performing sector.
Why is this being negged?
I don’t know about you, but I’m storing my cash under my bed
I have a bookshelf full of books, only when you open the books there are no pages, just stacks of money.
Wow you must have a lot of money….Can I visit and have a look at these books of yours?
OzBargain money saving advice. Make a mattress of cash to save on buying mattresses.
OZB entrepreneur here. I’m going to sell mattress frames with cash holders ready made!
(Customer list may be available for the right price too😎)
Chinese tend to do that - criminals know that - which is why criminals tend to break into Chinese homes - and steal the life savings stored under the bed
in another story - an old lady (don't know which culture) living alone was found unconscious and taken to hospital where she recovered slowly
as a treat, her loving daughter bought her a new mattress as a surprise when she came home
it sure was - 'where's my mattress !!?!?!? it had my life savings hidden in it !!!'
followed by fruitless searches of garbage dumps -
and the lesson was 'it's safe under the mattress - until it isn't'
Don't panic - The APRA proposal is basically for a discussion paper to discuss how the banks will cater with such a situation - at the bank admin level.
It is a very complex situation that also impacts the forex markets
For negative rates to be applied at the retail level would be a drastic step and not in the slightest likely.
We end up an island basket case like Cyprus.
Was wondering if you know why CB's resort to negative interest rates?
Obviously I don't because I don't write an essay.
APRA is just playing follow the leader because Bank of England asked their banks to get prepped for negative rates months ago.
Negative rates are for lazy brained central bankers. If they looked at Sweden, ECB and BoJ you know why. It is just like high interest rates don't fix hyper inflation in places is Zimbabwe. Bitcoin won't solve problems in El Salvador.
In Cyprus they didn't do QE, bail outs or negative rates. They made depositors do a bail in.
I'll come back to you when I have cash.
How much money are you talking about?
Invest in ginger
This made me laugh for some reason.
Invest in growing ginger
Under the bed.
VDHG or DHHF.
Eneloops retain up to 70% of charge after 10 years of storage.
I plan to put my money in an offset mortgage account, like I always do.
As for the fear of negative rates themselves, how about worrying about it if it happens, than worrying about it now when it's a non existent problem?
Good I've dumped all my deposit money into buying a place back in 2019
No point to keep them in bank account even now, and not even talking of negative rates.
InB4; Gold, Silver, any crypto, tulips…
Places to Store Cash Safely if Rates Go Negative
Move the money to your everyday account….. No interest paid on them, so no 'negative' interest either ;)
Nah I think the catch is, banks will charge you interest no matter in which account you are keeping the money.
The only solution is to cash out or invest.
Everyday accounts have '0%' interest now…. So kinda little rich for them to sudden say, oh we need to start charging you 'market' rates after decades of charing 0% interest :)
Shift the money into your credit card account.
Or just go to the bank and take out the cash!!! hahahaha
So kinda a little rich
That's the exactly modus operandi of the banks!
They do do negative interest rates in Denmark - DKK100k is a touch over $20k AUD
https://danskebank.dk/en/personal/ratechange
If you have your NemKonto with us, negative interest will be charged on total cash deposits exceeding DKK 100,000. This means that you will pay negative interest if the cash deposits in your accounts exceed a total of DKK 100,000.
If you do not have your NemKonto with us, the total cash deposits will be subject to negative interest.
A dining table's hollow leg.
Nobody is going to steal a table or it's leg. But the downside I guess is obvious - in case of fire, RIP money.
I also stash some inside my old soundbar (that is still working lol), but to access it I have to disassemble it, but I didn't need it yet as that is a absolutely last resort emergency fund.
So if your smoke alarm goes, you call the removalists before the fire brigade?
That might look suspect on the subsequent insurance claim.
Someone stole my bed once.
That's the sort of thing that keeps people up at night.
Behind the plasterboard in the walls? Under rocks in holes in the backyard?
I remember Mr Kim put an envelope in the back of his old TV too. Might work… Mrs Kim didn't know when she gave the TV away…
In all seriousness - IMO depends on how much one is talking about, and how that value relates to the overall wealth and risk percentage.
I'm holding some in cash still, and shares. Despite the super-low interest rates, I'd be recommending anyone with debt to pay it out. The cost of borrowed money is still a cost. So pay off any major debts or high interested loans such as credit cards etc. If savvy and able to manage risk well, then one can leverage the cash for additional investments if they like. Shares/LVR etc.
Ok, ok.. Buy watches, yes watches! It's only a matter of time… right?
I remember Mr Kim put an envelope in the back of his old TV too. Might work… Mrs Kim didn't know when she gave the TV away
Don't laugh, my grandfather kept $30000 in the back of the TV. That was 20 years ago. No we didn't give the TV away.
There money in TV
was his name Skase or Bond?
I remember Mr Kim put an envelope in the back of his old TV too. Might work… Mrs Kim didn't know when she gave the TV away…
+1 for Kim's Convenience! haha
But Mrs Kim got all the votes… He thought it was a sexist thing and broke the award… Ha!
I'll vote for that comment though!
There's always money in the banana stand.
Seriously though, just bury a lockbox in your backyard if you're that worried about it. Fire proof, theft proof-ish if noone sees you bury it, and will keep for ages thanks to our plastic money.
Just make sure he doesn't put up this sign in the backyard "此地无银三百两"
Invest in firewood. Those price gains in the last year are crazy.
Offset account and VDHG.
First off:
PANIC!
It's great for those that take advantage of people that panic.
Then store all your cash in a hole in your yard.
China is only beginning to power on
Just in case people here dont get it
INTEREST RATES ARE ALREADY NEGATIVE!
yep thats right.
Whilst you earn 0.1% on your cash, inflation is running rampant as we all well know.
Inflation is not 2% as the Govt says but more like 10%
Even if we take 2% as true you are losing 1.9% on your money
But even if you don't accept this then consider after deducting bank fees you are left with less money in your account.
So there you have it folks
We are already in negative earnings on your bank account money
And just to rub your nose in this the govt then charges tax on whats left (if anything) so you are left with diddly squat.
Yeah the whole way inflation is calculated is such a fix imho
The biggest problem I'm facing is the months in between when I am changing my asset allocation.
Usually it takes around 2-3, (feels a lot longer at the moment due to the lack of choice…) months to find a good entry point in real estate or "insert some obscure asset class". In that time I'm holding cash and if it's a negative rate I'm going to be annoyed.
I'm hoping there will be some kind of custodial account that is a non-bank entity that can help us bypass negative rates into the future; be it utilising some type of legal trust/entity or something else.
I suspect that transactions accounts will start charging negative rates first. That's how negative rates are supposed to work and encourage you to use it. If we get negative rates on a savings account, it would be very disappointing, but I think it is more a when rather than if.
It's all financial trickery.
Currently, I'm trading a few positions in the meantime, but not every day is a good trading day. I'm profitable with my trades but I maintain my edge and margins by not overtrading.
I have not had time to read about the implementation of negative rates overseas. I should really allocate some more time to that.
virtual gold
Stable coins and earn interest on the way
There is so much fraud and so many rugpulls in the 'stable' coin area, that the OP would be better off storing cash in a safe and risking theft.
Not so if you stick with something like Tether.
Yes, Tether. The company that said every tether was backed by a dollar, except it wasn't. Then they said they had an audit, which wasn't an audit. Then they changed their site to say tether is backed by loans and investments.
The blow up will be spectacular.
@Cluster: USDT is pegged to the USD. Nobody cares that it isn't backed 1:1 by USD. The only thing that matters is that the code works as designed.
Cash depreciates… Diversify
There are some good stable coins backed by financial institutions
totally!
maybe at least check with this guy and his buddies - https://www.youtube.com/channel/UCFQMnBA3CS502aghlcr0_aw
the Save The Kids token - the rugpull code was removed when released, don't invest is something you don't understand etc….I don't understand it and most people's opinions are also unresearched re-parroted garbage.
Buy high-yield BMWs