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When if ever do you guys think we will have decent bank savings rates again?
Posted on 4/21/16 at 1:56 pm
Posted on 4/21/16 at 1:56 pm
Growing up the idea of retirement was you save a nice bit of money and make 8%/yr or more in the bank risk free. Treasuries in the 80s paid 15% haha. Its such a wild world we live in when $100,000 nets you a dime per month these days. What do you guys think on when or if we ever see rates like that again. Is it even possible? I mean raising rates to those levels would crush housing. Could average homes even be $300-500k with 7-8% mortgages again? It's something I always ponder but realistically don't think we ever see again. I can't fathom a $1M mortgage at $80k/yr of interest vs the $40k/yr or so most people are financing at today.
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Posted on 4/21/16 at 2:05 pm to dabigfella
Depends, do you think digital currency will be forced upon us? If so, you will likely never see it again.
Posted on 4/21/16 at 2:05 pm to dabigfella
Back in 2010 I got a 4% checking account for amounts up to 20k. Few months after getting it, they dropped the rate to 2%, but that still isn't terrible. I couldn't imagine making 8%. That would be awesome.
But like you said, if that made mortgage rates shoot up, then we'd be left with crazy depreciation on houses.
But like you said, if that made mortgage rates shoot up, then we'd be left with crazy depreciation on houses.
Posted on 4/21/16 at 2:08 pm to dabigfella
quote:When the Federal Reserve raises interest rates to a decent or higher level.
When if ever do you guys think we will have decent bank savings rates again?
/thread
Posted on 4/21/16 at 2:16 pm to dabigfella
when we actually start getting some CPI inflation.
People who think they are making money when inflation is at 5% and CDs pay 4% are hilarious.
People who think they are making money when inflation is at 5% and CDs pay 4% are hilarious.
Posted on 4/21/16 at 2:48 pm to dabigfella
quote:Hopefully, never....
Treasuries in the 80s paid 15% haha.
What do you guys think on when or if we ever see rates like that again.
Posted on 4/21/16 at 3:03 pm to TheHiddenFlask
bingo.
To the OP, you must not remember those 15% mortgage rates as well in the 80s.
To the OP, you must not remember those 15% mortgage rates as well in the 80s.
This post was edited on 4/21/16 at 3:04 pm
Posted on 4/21/16 at 3:19 pm to dabigfella
I think about this all the time and have come close to posting it here before. I see no way we can ever get back to those rates. 0% is here to stay...forever. If the Fed tries to raise them back up, the federal government will default on its debt, triggering catastrophe. Even though the Fed is "independent", there's no way the sitting President would allow that to happen. I laugh every time I read these pension auditors who have based their payouts on 7.5% annual growth. It's not happening ever again. If you had money in the markets in the 80's and the 90's, count your lucky stars. Those of us with a while to go need to find other avenues of growth. The only good news is that the whole system is rigged, and it's unlikely that the powers that be would let it collapse as it occasionally needs to.
Posted on 4/21/16 at 7:16 pm to Novae
quote:Not "annual growth."
pension auditors who have based their payouts on 7.5% annual growth.
Actuarial assumptions include an average annual rate of return on the investments in the pension trust fund. And most pensions meet or exceed those assumptions over any multi-year timeframe.
For example, one of the Louisiana state retirement funds had a return over 11% last year.
Posted on 4/21/16 at 7:55 pm to dabigfella
quote:
Could average homes even be $300-500k with 7-8% mortgages again? It's something I always ponder but realistically don't think we ever see again. I can't fathom a $1M mortgage at $80k/yr of interest vs the $40k/yr or so most people are financing at today.
In the mid 80s people would have killed for a 7-8% mortgage rate, they had peaked at over 18% in 1981 and the rates in 1983-86 were in the mid teens range. In 1984 I put down a large chunk of money on a house to assume the owner's 9.8% mortgage, assuming a lower interest mortgage was the only way a lot of people could get a payment low enough to afford a house.
LINK
Posted on 4/21/16 at 8:34 pm to dabigfella
Sad really. You used to be able to put money in the bank as a safe place. Now? You lose 3% a year in inflation. This is why the DOW is at 18,000. People's "emergency funds" and what not are in the market. When the market crashes again, it's going to hurt big time.
I think we used to see a balance of socks and other market funds with bank savings. Now? Heck, it's all market.
I think we used to see a balance of socks and other market funds with bank savings. Now? Heck, it's all market.
Posted on 4/22/16 at 12:30 am to crazycubes
Ehhhh
It's not as bad as you make it sound.
You just have to be smarter about it, slowly moving into a diverse mixed fund over time.
If the principal grew 120%, it really doesn't hurt you anywhere but perception if you are forced to sell when the markets are down 40%
It's not as bad as you make it sound.
You just have to be smarter about it, slowly moving into a diverse mixed fund over time.
If the principal grew 120%, it really doesn't hurt you anywhere but perception if you are forced to sell when the markets are down 40%
Posted on 4/22/16 at 6:47 am to crazycubes
quote:
Sad really. You used to be able to put money in the bank as a safe place. Now? You lose 3% a year in inflation. This is why the DOW is at 18,000. People's "emergency funds" and what not are in the market. When the market crashes again, it's going to hurt big time.
I think we used to see a balance of socks and other market funds with bank savings. Now? Heck, it's all market.
I know what you mean, right now I have part of my emergency money in a Vanguard 2025-2030 target fund..
Posted on 4/22/16 at 7:16 am to dabigfella
If banks are paying 8% on savings they sure as hell aren't going to be lending at the same rate.
Posted on 4/22/16 at 8:18 am to VABuckeye
I bought my first house in 1980 at 13%.
Posted on 4/22/16 at 9:06 am to Novae
quote:
If the Fed tries to raise them back up, the federal government will default on its debt, triggering catastrophe
This makes sense if you don't understand financial markets and central banking and makes absolutely no sense if you do.
Posted on 4/22/16 at 9:13 am to TheHiddenFlask
quote:
This makes sense if you don't understand financial markets and central banking and makes absolutely no sense if you do.
Thoguht the same thing when I read it.
If we continue our budget deficit, raising rates would be bad. Raising rates isn't that big of a deal without other contributing factors
Posted on 4/22/16 at 10:15 am to GenesChin
What are the boards thoughts on MUNI funds? Ive had pretty good success with them over the last few years. Netting an average of about 4%.
Posted on 4/22/16 at 11:26 am to TheHiddenFlask
Obviously, I don't believe the government will be allowed to default. They have too many available strings to pull to avoid that. I was just being extreme. But please explain what long-term options there are for raising interest rates back up 3-6 percentage points without triggering a depression.
This post was edited on 4/22/16 at 12:13 pm
Posted on 4/22/16 at 11:32 am to Novae
i doubt we will see 5% 10 years in the next 10 years. get used to almost free money.
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