Investing

INTEREST RATES WENT NEGATIVE | GOODBYE SAVINGS

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Interest Rate Futures just began trading negative – here is what this means, how negative interest rates would impact you, and how you could get paid to borrow money – enjoy! Add me on Instagram: GPStephan

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On May 8th, MarketWatch published an article on what’s known as the Federal Funds Rate…which is the interest rate that BANKS charge OTHER banks anytime they lend money to each other. For the first time EVER…those interest rates just began to go NEGATIVE.

That’s because the contracts are trading at OVER 100…meaning, at these levels…you would invest $100 and 2 cents…and then get paid BACK only $100, which works out to be a NEGATIVE 0.02% interest rate on your money. And, the longer out we go from January…the more we can see interest rates are going negative.

So, that lends the question…why would ANYONE ever invest money in something like this, EXPECTING that the outcome is that you’re going to back LESS money than you invested?

Think of it almost like a safety deposit box, where you pay $50 a year to store your valuables…except, now, you pay the government to hold your money and keep it safe, for the small fee of 0.02%. Now, keep in mind…even though negative interest rates are being priced in to the market…it doesn’t mean that it’s going to happen. Investors right now are pricing in the likelihood of this one day being the case…or speculating that, if interest rates drop BELOW that…they can make some money…but, only time is going to tell how this will unfold…although if it does happen though…here’s the outcome:

If that happens, it’s going to incentivize people NOT to hold on to their money, and – instead – spend it. The goal is to penalize people from saving too much, and FORCING them to spend or re-invest it back into the markets – THEREFORE, negative rates, in theory, would help lift the economy from that perspective.

If you think this is absolutely just WILDLY crazy and that this shouldn’t even exist…well, there are quite a few countries that ALREADY have negative interest Raes: Switzerland is negative 0.75%, Denmark is negative 0.6%, Japan is negative 0.1%, Sweden is 0…and so is Spain.
https://www.investopedia.com/articles/personal-finance/051415/5-countries-lowest-interest-rates.asp

The PROS of doing this is, like I mentioned, it penalizes people and banks who hold too much cash – and it PUSHES people and banks to either lend their money more freely, or invest and spend their money back into the economy to help kickstart growth.

The downside, though…is that, as we all know lending money is a RISK…and NO BANK wants to take a RISK that the borrower isn’t going to repay back their loan, AND pay that borrower for the privilege of doing so. Which means, if rates go negative…either lenders would STOP lending money, or they would end up charging fees upfront to make up for their loss.

Not to mention, If people take their money out of banks to avoid paying interest, it could also cause LESS money to circulate through our economy.

And really…at the end of the day…the purpose behind this is just to AVOID DEFLATION, where our money becomes MORE VALUABLE the longer we hold on to it – or, in other words, it’s the opposite of inflation. When THAT happens…people don’t spend their money, they hoard cash, and that could cause our entire economy to spiral into another endless depression. So, to fight back against that…rates are lowered, people can borrow more, they make less interest on their money so they would rather spend or invest it – and that helps keep a steady amount of inflation, while boosting the economy.

For business or one-on-one real estate investing/real estate agent consulting inquiries, you can reach me at GrahamStephanBusiness@gmail.com

*Some of the links and other products that appear on this video are from companies which Graham Stephan will earn an affiliate commission or referral bonus. Graham Stephan is part of an affiliate network and receives compensation for sending traffic to partner sites. The content in this video is accurate as of the posting date. Some of the offers mentioned may no longer be available.

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32 Comments
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Robert Dunfee

32 Comments

  1. Ivan Padilla
    July 22, 2021 at 2:28 am

    That Rush cover, i destroyed that like

  2. alvin kada
    July 22, 2021 at 2:28 am

    You earned my notification bell with the intro I died laughing.

  3. AD COMEDIES
    July 22, 2021 at 2:28 am

    Do a quick google search for ECOM BAZZOID someone posted your courses Graham

  4. sunil k faizal malayalagramam
    July 22, 2021 at 2:28 am

    Do a quick google search for ECOM BAZZOID someone posted your courses Graham

  5. Priyanki Gaming
    July 22, 2021 at 2:28 am

    Do a quick google search for ECOM BAZZOID someone posted your courses Graham

  6. Dancing Feet
    July 22, 2021 at 2:28 am

    Do a quick google search for ECOM BAZZOID someone posted your courses Graham

  7. VINO CRAZY CUTZ
    July 22, 2021 at 2:28 am

    Do a quick google search for ECOM BAZZOID someone posted your courses Graham

  8. chandragiri Sanjal
    July 22, 2021 at 2:28 am

    Do a quick google search for ECOM BAZZOID someone posted your courses Graham

  9. Manny The Engineer
    July 22, 2021 at 2:28 am

    Wtf this is 2020 cyber bullying

  10. S124434
    July 22, 2021 at 2:28 am

    I just want the money, just in case, so just going to save, regardless.

  11. Nacho Libre
    July 22, 2021 at 2:28 am

    Wow! Graham is tekashi69 of investing. Straight trolling. Lol.

  12. Data Doggo
    July 22, 2021 at 2:28 am

    You’ll be rich and successful one day🙏also, I would love if you checked out my channel!

  13. Lazarus
    July 22, 2021 at 2:28 am

    yyz? ok u get a like, a sub and a short video binge.

  14. Jesias
    July 22, 2021 at 2:28 am

    6:33 smashes algorithm for the like button 😇 so much funner to comment expecting the answer. [yeah, don’t invite guys like me to watch a movie…] 😆

  15. Jesias
    July 22, 2021 at 2:28 am

    3:48 the idea is not to invest money, the idea is to invest time at that point. It is guaranteed that time>money, hence those interest rates show that investors are more common than workers, thus investors are worthless compared to actual workers.

  16. Peter Rodriguez
    July 22, 2021 at 2:28 am

    Pulling out a million dollars out of the bank is easy, just buy 500oz of gold or 120 bitcoin, done.

  17. Silina Freeman
    July 22, 2021 at 2:28 am

    I don't have to worry about interest rates because my portfolio grows tremendously as i invest with Mr Garvey. He's genius.

  18. Reese Anderson
    July 22, 2021 at 2:28 am

    don't mind me I'm just here for the drama

  19. Sulaiman Adil
    July 22, 2021 at 2:28 am

    Confusing

  20. Userzxcvn
    July 22, 2021 at 2:28 am

    How did you see January 2021 market prediction

  21. iNt0x XtremelyKingky
    July 22, 2021 at 2:28 am

    Definitely smashed that like button!! Awesome content, but even a more awesome intro and outro. More drum solos!!

  22. Mario Plozza
    July 22, 2021 at 2:28 am

    Yo Graham, just a little insight for you conccerning negative interest rates and how it "could" play out:
    Here in Switzerland we have had negative interest rates for quite a while now. At first banks did not really charge interest to their clients.
    With time however, they started charging the negative interest rates to bigger clients (firms, institutions) with balances over a certain threashold, which also depended on the bank (be it 1 Million, 500k, etc). They later/now also started doing this for private persons accounts, not all banks yet and generally if your balance is under 100k I havent found any bank that does this).
    Most checking and saving accounts have had a 0% interest rate for a while now. Our mortgage rates have been very low for a few years too, with between 0.7 and 2% depending on how long the mortgage is.(and other factors of course)

  23. Xx_Iphone_xX
    July 22, 2021 at 2:28 am

    I heard you’re a scam until than i will subscribed back one day 😕🌿

  24. 1
    July 22, 2021 at 2:28 am

    Graham: 20 sec intro without referencing anyone
    ClearValue Tax: Makes 7 min response video

  25. George Comeau
    July 22, 2021 at 2:28 am

    It felt this has been happening for some time now. Banks have been charging more in service fees than in interest. Checked your statement it's shocking how much they charge to hold on to your money.

  26. kikin310
    July 22, 2021 at 2:28 am

    invest in pee and throw at the crooks that created this problem

  27. Katie Noyb
    July 22, 2021 at 2:28 am

    I was so close to opening up a savings account.

  28. PirateKing Luffy
    July 22, 2021 at 2:28 am

    The only reason that foreign contries negative interest rates actually work is because ours is positive. Who will balance the scales then

  29. Chris Kelso
    July 22, 2021 at 2:28 am

    You get the like for the drum cover dude.

  30. roundedges2
    July 22, 2021 at 2:28 am

    With neg interest rates, I will invest in stuffable mattress companies.

  31. R. A. Perez
    July 22, 2021 at 2:28 am

    Not interested!

  32. Your Subconscious
    July 22, 2021 at 2:28 am

    I cannot believe I paid a university for the same information I am reminded of what I forgot that I could have just learnt from Graham.