Cash, what to do with it come negative interest rates?

[Humble Village Farmer]

BIG plus for classic cars and tractors is they are GCT free

Big minus is that they are over priced luxuries and when the sh!t hits the fan they are the first to fall out of favour.

 

[DrWazzock]

Go to Las Vegas and have the time of your life .

I have often worked for old farmers in their 80’s out in all weathers with them still working. They have no kids or kids long gone to good jobs. They are sat on millions but keep on farming. Must be a grand job.

 

[PSQ]

'Cash is king' - even if it's not making money, liquid assets might just be the wisest answer if the economy tanks, and an opportunity to buy something that will fit into your business.

Not a great return, but NS&I are paying 1% on Premium Bonds, which is about 1% higher than any deposits at bank, and they're quick to cash in.

'Wealth management' with any of the big investment funds, which have historically been a 6% to 8% return, not as easy to get into and out of with some asking for a 2% 'entry fee' ( ). "Past performance is no guarantee of future gains", and with the global economy looking like it's built on sand there could be a serious correction on the way...

Finally, at some point the governments (Conservative or Labour) Covid 'tab' will need to be paid back, and the chancellor will have to raid some sectors for cash. It's going to be extremely painful for many so you might as well spend it on you and yours while you've got your health, before the politicians spend it on themselves and their own. Life's for living.

 

[lloyd]

6 months too late !

Copper is on the rise by the sound of it.

 

[Clive]

Big minus is that they are over priced luxuries and when the sh!t hits the fan they are the first to fall out of favour.

if you look at historic data they consistently beat most other investments actually

if i had a time machine I would buy Apple shares and 250gto’s / mac f1’s ! at pretty much any point in the last 40 years

 

[lloyd]

I have often worked for old farmers in their 80’s out in all weathers with them still working. They have no kids or kids long gone to good jobs. They are sat on millions but keep on farming. Must be a grand job.

That generation have sadly gone .

 

[GeorgeK]

Been researching on this forum and can conclude the future is... Blackies!

 

[DrWazzock]

That generation have sadly gone .

Learned a lot from those old boys. They could certainly produce a lot from very little. I often think return on capital as a percentage has actually declined in farming. Assets really were sweated. Not so much now.

 

[curlietailz]

NS&I might be a safe bet

 

[lloyd]

Learned a lot from those old boys. They could certainly produce a lot from very little. I often think return on capital as a percentage has actually declined in farming. Assets really were sweated. Not so much now.

Modern day farmers want the same free time as their townie cousins ,
they've had cash in their pockets and like spending it.
The old boys had to make do and had more modest expectations ,
of course in their time it wasn't so easy to be carefree with money
as the banks were alot more cautious lenders and getting yourself
into eye watering debt was frowned on.
They could certainly make things go round and last longer.

 

[Humble Village Farmer]

if you look at historic data they consistently beat most other investments actually

if i had a time machine I would buy Apple shares and 250gto’s / mac f1’s ! at pretty much any point in the last 40 years

Time machines don't count but I take your point. It's just not something I personally like the idea of investing in (assuming 250gto’s / mac f1’s are classic cars).

There's a big difference between value and perceived value. Rarity of an item without function is perceived value. Look at the way the price of diamonds is manipulated by controlling the supply.

It's much more difficult to convince someone that they "need" a classic tractor more than a loaf of bread, especially if they are hungry with limited funds.

 

[farmerm]

I'm going to leave it in the bank.

99 percent of something better than buying something I don't want, to find it's only worth 80 percent of what I paid for it.

Inflation at 1.5%, interest at zero, 13 years and it will be worth only 80% of what you paid in

 

[farmerm]

Stuff it in your mattress, won’t go negative interest in there! I’ve told the wife that the moment it goes negative our joint savings are coming out of the building society and I’m putting that new shed up!

Rates will not go negative in the retail banking sector.. If they did there would be a collapse, people would try to cash out and there is a lot more zeros in the banking system than there is physical cash in existence. That is not to say the retail sector will not end free banking and introduce fees, effectively the same as negative interest but less likely to cause a run on cash.

 

[farmerm]

few years? - i think its already happening

good reason not to have cash or savings

buy assets

I think traditional economists would argue that high unemployment = low inflation would they not?

 

[Michael S]

I read an article a few months ago about countries that had used negative interest rates and the reality is that lenders often didn't benefit much but banks were happy to charge a fee on credit accounts. The message from the central bank is spend it or invest it to support the economy.

 

[Tubbylew]

I read an article a few months ago about countries that had used negative interest rates and the reality is that lenders often didn't benefit much but banks were happy to charge a fee on credit accounts. The message from the central bank is spend it or invest it to support the economy.

Thats the trouble with banks, they'll always feather their own nests first, some banks handling of the bbls shows how begrudging they are to help the population at large. Until a few greedy stockbrokers go rouge and fudge it up, then they're fast enough asking for tax money to save their skins. I can only see a negative base rate fueling inflation tbh, particularly as everyone tries to chase their losses after COVID.

 

[jackrussell101]

I think traditional economists would argue that high unemployment = low inflation would they not?

Traditionally yes but interest rates can create asset price inflation which is different to wage inflation, in theory with negative interest rates asset prices could be infinite... so according to Warren Buffet in a recent tv interview...

 

[Fendt65]

Been researching on this forum and can conclude the future is... Blackies!
View attachment 915686

white sheep matter!

 

[Tubbylew]

Traditionally yes but interest rates can create asset price inflation which is different to wage inflation, in theory with negative interest rates asset prices could be infinite... so according to Warren Buffet in a recent tv interview...

Absolutley true imo. the only thing keeping the price of machinery so high is the cheap price to borrow the money to buy it.

 

[Tubbylew]

white sheep matter!

I thought cheviot mules were where the smart money is!