RTE article today - savings rates

[Sarenco]

All true, of course.

However, in the US FDIC insured deposits are backed by the full faith and credit of the US government.

Now that really is risk free!

 

[ClubMan]

€100k in five years time is worth less that €100k now.
So, not actually risk free.

Anyway, at this stage, if some people want to believe that deposits are risk free then knock yourselves out.

 

[noproblem]

€100k in five years time is worth less that €100k now.
So, not actually risk free.

Anyway, at this stage, if some people want to believe that deposits are risk free then knock yourselves out.

Better than anything you've come up with.
I do notice that some people are getting a tad snobbish about where the simple people might want to deposit their money. So what if it doesn't match inflation, not much in the world, if anything, that's doing that now. No trouble with plenty of "advisers" coming on here telling the obvious, leaving it on the best deposit rate at the moment won't match inflation, but not telling us where it should be put. Oh, I forgot, historically it does better in a grouping of equities, or funds, etc. Sure hasn't it always done better that way, then show us the 5/10/20 year charts. Many of us might be simple ordinary people, some with nice pots, others with very sizeable pots and others still with enviable large cauldrons of booty. The best available places to put dosh at the moment have been highlighted, no need for those perceived enlightened financiers among us to belittle that fact, and tell people it's not the place to put their hard earned money.

 

[Brendan Burgess]

Hi noproblem

It is really important to appreciate that no investment is risk-free. Paying down a mortgage is risk-free and tax-free.

People often ask me to recommend a risk-free investment and I tell them that.

If you are investing over 10 years, cash is very likely to lose some of its real value. An investment in shares might lose its real value or it might earn a real return. The longer the term, the less risky an equity investment becomes. Whereas the longer the term, the more risky a cash deposit becomes.

Brendan

 

[fistophobia]

I dont worry about inflation hitting my cash balances.
I plan on adding a % each year while inflation is high, to preserve real value of my cash.
A bigger problem is "lifestyle inflation". Spending more, as you earn more.

 

[jim]

Inflation is a reality. All we can do is choose wisely to preserve and ideally grow our wealth.

Deposit accounts are an option for some people as part of a suite of things they may be doing.

Like anything, seek the best rates of return available. Choose Raisin, choose life.

 

[noproblem]

Paying down a mortgage is risk-free and tax-free.

In the same way as anything else. Hopefully it's fully insured and doesn't go on fire or get blown up in a storm. So I suppose you could say, not fully risk free.

 

[Brendan Burgess]

You are mixing up two completely separate things.

Paying down a mortgage is risk-free.

By your logic, putting money on deposit is doubly risky as it will be hit by inflation and your house might burn down.

Brendan

 

[NoRegretsCoyote]

However, in the US FDIC insured deposits are backed by the full faith and credit of the US government.

The EU now has a resolution fund with €60-odd billion in it on top of national DGSs. In a few years the EU resolution fund will be de facto able to fund resolutions via borrowing from the ESM with a capacity for another €70-odd billion. Several EU banks have been resolved in recent years with no loss of deposits and minimal disruption to the normal economy.

All the while EU banks are better capitalised than in a very long time and all banks have to have very elaborate plans in place to deal with declines in asset quality or liquidity shortages that could precipitate a crisis. Bank supervision is literally 10x more intrusive than pre-GFC. My own view is that some of the recent crypto madness was a result of regulation successfully making traditional financial products too safe for people with a high risk tolerance to have an interest in!

Anyway personally I have zero fear of loss of nominal funds <=€100k in an EU bank account.

 

[Sarenco]

The EU now has a resolution fund with €60-odd billion in it on top of national DGSs.

It does indeed.

But the single resolution fund represents less than 1% of covered deposits.

Nowhere near as comprehensive as a FDIC (US Government) guarantee.