News for hackers. Stuff that matters.

A comment on Banks are slow to increase rates on savings accounts, but quick to reduce them. Parent comment

Re:Banks are slow to increase rates on savings accounts, but... by rjkennedy98 on Saturday July 25, 2020 @08:20AM (#23948648)
There are a lot more people than you think that simply don't invest their money, instead they keep it in savings accounts. My aunt is one of those people. She got a large inheritance and basically kept it in a savings account for 20 years. My mom got the same inheritance and bought investment properties with it and now its worth 10x. I think it comes down to the fact that a lot of people are risk averse or feel that investments are too complicated for them.
[ Parent | on HN ]
Re:Banks are slow to increase rates on savings accounts, but... by stagger87 on Saturday July 25, 2020 @09:02AM (#23948868)
10x? I'm not familiar with real estate. How does one earn 10x in that time frame. Even with a price to rent ratio of 1 to 15 and assuming housing prices double over that period, you still aren't at 10x, and that doesn't include maintenance, taxes, closing fees, etc.
[ Parent | on HN ]
Re:Banks are slow to increase rates on savings accounts, but... by rjkennedy98 on Saturday July 25, 2020 @12:47PM (#23950574)
Not too hard if you buy California real estate with 10% down in the 80s.
[ Parent | on HN ]
Re:Banks are slow to increase rates on savings accounts, but... by readams on Saturday July 25, 2020 @09:34AM (#23949053)
Leverage. Let's say the inheritance was 50k. You make that a 10% down payment on a 500k house. Assume rent covers your interest on the loan, taxes, etc. 10 years later the house appreciates 100% to 1M. You sell the house.

You just made 500k from 50k.

[ Parent | on HN ]
Re:Banks are slow to increase rates on savings accounts, but... by perl4ever on Saturday July 25, 2020 @12:38PM (#23950503)
Did you mean "etc" to include maintenance, principle payments, and transaction costs?

It doesn't sound like you're describing the magic of leverage, but the magic of having an arbitrary amount of cashflow.

Makes me think of https://en.wikipedia.org/wiki/Robert_Kiyosaki and https://en.wikipedia.org/wiki/Trump_University

[ Parent | on HN ]
Re:Banks are slow to increase rates on savings accounts, but... by chrisseaton on Saturday July 25, 2020 @09:53AM (#23949174)
Instead of just buying an asset and then selling it, you can also buy an asset, use it to make money while you own it, and then also sell it.
[ Parent | on HN ]
Re:Banks are slow to increase rates on savings accounts, but... by viraptor on Saturday July 25, 2020 @08:25AM (#23948678)
Even if you're risk averse, a limited time, guaranteed rate investment available in most banks will give you more than the checking account rate. (as long as you're happy to lock the money for 6+ months)
[ Parent | on HN ]