Interest on savings

[Blue Collar Guy]

I just read that the projected inflation for 2017 is 2.1 %, so at 1.2 you lost 1 %, then minus the taxes you pay on the 1.2 % interest and its worse.

 

[CaptTom]

Idnar--
If your memory is good enough to recall those 13% MM rates, I'm sure you'll remember the general Economic Climate back in the early 80's also.

The rampant inflation of that time (anybody save Gerry Ford's Whip Inflation Now buttons ??). Mortgage Rates were also 12 - 13% and the Housing Sector was stagnant. As I remember it, the Auto Industry was in the doldrums too as Detroit couldn't react to the gas shortages with efficient vehicles. When 2 of the major pillars of the Economy were staggering......there's not much to be hopeful about.

Right. I'm NOT hoping for higher interest rates! Especially with a non-COLA pension as part of my mix.

 

[VFK57]

In order to see the rates going back to normal, we need to see a booming economy with thirst for investments. Since 2008 we see only "great talk of expansion" while actual growth is very modest as huge debt, deficit and most importantly hugely negative trade deficit drugging down the growth.

 

[StartingPath2Freedom]

I think they'll go back to low-mid single digits in time, but not for years. More likely get to about 2% and hold there for a while.

Remember, a big driver of the bull market has been lack of anywhere else to put cash (especially after the RE bust) to grow money. Make it even a bit attractive to put your money in a good CD ladder or MM savings account, and the balance tips again. If you could make 6% with no risk in the bank, why put it in an index fund for a chance at 7%. The markets shudder at the thought of capital fleeing.

Isn't the market average 7% after inflation?