The macroeconomic situation in the world is that we are still many years, if not decades, will have to live in an environment where banks will not pay on foreign currency deposits. It is possible that change over time and the notion of the Deposit. Already starting to appear in USA special deposits the profitability of which depends, for example, how “the load” S&P500 index over a given period of time. And this is only the beginning of a new era, which will have to live for us and our money.
Why do people continue to buy these securities and keep currency in banks, despite the fact that it is simple contrary to common sense? Howard marks has tried to find an explanation for this phenomenon. His main conclusion came down to the fact that people are just afraid that over time interest rates will be even lower, and that their present choice would be not be so bad.
What should I watch for?
The use of negative rates could lead to the fact that the light will be a variety of fraudulent schemes, offering those in need the opportunity to “earn more than a Bank”. I think that in one way or another do not miss your chance to capitalize on the difficulties of the customers and the banks themselves, as well as investment and financial companies.
In this regard, we may soon be facing a significant deterioration in the material well-being of Russians hankering for such an offer and left with nothing. Not to be unfounded, I will result some examples of questionable proposals that are now circulating in Europe (deliberately not giving links, not to make this companies advertising).
Here is an example of “Austrian” scheme with a guarantee. What do they offer? The easiest option is a basic account, such as dollars or euros. You promise to pay guaranteed 4% per annum. There are no restrictions on time to pick up the money at any time. The application is made as simple as possible: it is not necessary to show the origin of money, tell you about tax residency, confirming the address of residence – all without what the now no Finance company can not even begin to talk to you. For those who want to open savings program from one year to ten, a guaranteed income above 6 per cent. A worthy replacement of foreign currency deposits! Undoubtedly, in this scheme there are many who.
But what is “earn” our friends? You need to comb through the website to find a cursory mention of this. It turns out that the organizers of this scheme 50% of the money invested in lending companies, and corporate bonds and 50% invested in the global stock market. For anyone who is even slightly familiar with the basics of investing, it is clear that this approach does not imply any guarantee on the capital and therefore the income from it.
But the company from Antigua. The stakes here are already above – 7.5% per annum. We accept all currency. Big money is not necessary – you can start with 500 dollars or euros. The money will be transferred from the card. If you decide to keep their savings in, say, 5 years, your income may increase up to 10% per year. Another “good” offer from Estonia. Three-month savings account – 4.5% per annum, six-month – 6.0 percent per annum of 7.0%. All this is possible for amounts of €10 000. But in vain will you look for what the regulator gave permission for such activities, which, in principle, falls under the definition of “banking services”. Questions and answers on the company website there is only a link to the membership in The Savings and Loan Association. It will be small.
At the end of your letters to Oaktree clients Howard marks writes that protection against negative interest rates, he sees only the assets of the “steady cash flow”. We are talking about traditional “things” like stocks, bonds, real estate, etc. I Believe that for most investors, for example, Sberbank, which practically ceased to receive income on their foreign currency deposits, such advice is of little use, as it implies the involvement of highly skilled professionals.
What you can offer? Not much. The difficulty is that councils “for all” is almost gone. Will confine ourselves to some recommendations that may be in some degree useful to the vast number of Bank customers.
I would recommend not to make any “sudden movements”, not having received the opinion from the specialist. It should be clearly understood that, as a rule, all new solutions will be associated with an increased risk of loss – direct or indirect. In any case, no need to shift completely to the ruble. Especially those who have long-term goals, and they save money for their achievement. This is a risky path, as is currently the domestic currency, in my opinion, it does not quite fit.
10-15 years ago the problem with negative interest rates in Russia could relatively easily be resolved with the help of real estate. Now this is problematic and unpredictable.
Those who regularly set aside money with the goal to save up for a house, child’s education or old age, you can offer to start to buy on this money gold. The regularity of such acquisitions can allow you with a high probability not only to collect the necessary sum, but also a bit to earn.
For the same purpose can be 10-20% of what you save, invest in the stock market. The best way is not to philosophize, and to use a trusted exchange traded Fund ETF that reflects the dynamics of the broad market index USA S&P500. For people more advanced in the areas of investment and are willing to devote part of my free time, I would advise you to pay attention to the novelty in the field of financial instruments. This ETF series Buffer to protect their investment from falling stock market. This kind of replacement structured products – cheaper and more flexible.