Bond Negative Interest Rate

[sengsational]

For us, until banks start putting fees on checking and savings accounts, the value of the information about negative interest rates is only good as a data point on the world economy. If fees do arise, or for regular people in France, nothing stopping them from buying currency, keeping it in a bank vault, walking the cash to the teller, and making any magnitude purchase. This will probably trigger cash deposit reporing. I wonder if they have cash withdrawal reporting so they powers can maintain a tally.

 

[Totoro]

If fees do arise, or for regular people in France, nothing stopping them from buying currency, keeping it in a bank vault, walking the cash to the teller, and making any magnitude purchase.

In the Netherlands and I'm sure other countries too banks don't have vaults anymore for consumers. You can rent a vault from a non-bank, but it's only insured up to 45k.

 

[RenoJay]

I had Googled this last week and found this Forbes article. Is basically describes that for some institutions they're either forced only to buy domestic bonds and/or there's a lot of currency hedging that could make a negative-yielding bond more attractive than a positive-yielding bond in a different country. Welcome to Bizarro-world.

https://www.forbes.com/sites/garthf...lds-hopefully-your-bond-manager/#6e8d2fbe3306

 

[INTJ10]

Vanguard is recommending that I include International Bonds in the portfolio. So if I do add these bonds am I buying into negative/zero yields? That doesn't sound attractive. I know they are currency hedged but it doesn't seem to make sense in the longer term.

 

[audreyh1]

Vanguard is recommending that I include International Bonds in the portfolio. So if I do add these bonds am I buying into negative/zero yields? That doesn't sound attractive. I know they are currency hedged but it doesn't seem to make sense in the longer term.

IMO holding international bonds is not a requirement for a reasonable AA. You can blow that suggestion off if you like. Keep it simple.

 

[REWahoo]

IMO holding international bonds is not a requirement for a reasonable AA. You can blow that suggestion off if you like. Keep it simple.

^ What Audrey1 said. For me, international bonds are an added complication with questionable benefit.