When I told you 3 years ago already that stocks were less risky than savings accounts, I was a million miles from imagining that the Swiss National Bank would come up with an additional weighty argument several years later.
The abolition of the floor rate was accompanied by a drop in the Libor rate, which now stands at -0.9. The yield on Confederation bonds has become almost zero. Banks are already applying negative interest rates to their major clients. This means that they are losing money by leaving it stored in their accounts. Some pension funds are also considering transferring their assets directly into safes.
For individuals, there will be no significant impact yet, except that their savings and retirement assets will be less well remunerated. On the other hand, small customers, with zero interest rates and management fees that are not zero, are already experiencing expensive bank accounts. But what will happen when negative interest rates are also applied to them?
There is little doubt that when that day comes we will live a little like the days of our grandparents who hid their money under their mattresses, in the attic, in the basement or in safes. A nice throwback, isn't it?
That being said, fortunately there are still some investments that make money. Not bonds, since they follow rates (and as we have seen, the yield on those of the Confederation is zero). Physical real estate always brings in a little money, but you either have to manage it or pay management fees. It's the same for real estate funds, you have to pay management fees. And then real estate is hardly cheap at the moment.
Finally, there are stocks, and in particular those that pay dividends. Unfortunately the stock market is also very expensive at the moment. But just because the market is high doesn't mean all stocks are high, so it's worth looking a little harder than usual for good candidates by doing your homework.
The tools provided in the members area help you make the right choices. In addition, French investors will find valuable advice from our partner.
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Indeed Jérôme, despite the fact that the markets are currently highly valued, there will always be a few remarkable companies available at a reasonable price for the independent investor on the lookout.
It is important to note, however, that current valuations are not surprising given the historically very low level of interest rates across the world at present.
As long as rates remain low, the stock market will remain attractive to investors who want to earn a decent return on their investments.
Martin
Thank you for this post! It is true that already, just to fight the increase in prices, or what some call inflation, all the tools that are savings, government bonds, mattresses, safes, are unsuitable. We lose money that has already been hard earned. It is crazy to think that we never learned in high school for example, to protect ourselves and fight this increase in prices (and other introduction of inflationary taxes) throughout our lives. In financial education, this should be the number 1 hobby horse for every citizen!
So we must take action to seek out actions in action!
PS: I only plan to keep liquid precautionary savings in a pseudo savings account, and if one day we are taxed for this, the mattress will be the least bad solution