Trading 212 raises € interest to 4% paid daily

[harttysoul]

@stephenk Yes and there’s a lot of room to cut rates now if that scenario presents itself.

 

[stephenk]

@harttysoul rates arent a thing that are felt in the economy straight away, so you can cut as much as you want but companies and individuals will be blowing up in the meantime

 

[harttysoul]

@stephenk That may be true but people often price them in early or even the threat of them. My point being that if there was a big recession while interest rates were still historically slow then we would be back to the money printing machine. At least interest rate cuts are an option now.

 

[stephenk]

@harttysoul the question wasn’t if it is better to enter a recession with high rates or low rates, the question is if it is going to be a recession and in my opinion yes, specially after powell pivoting out of the blue. it tells me they are seeing it already

 

[harttysoul]

@stephenk But you’re even saying yourself that they are using those tools before a recession has truly hit.

 

[stephenk]

@wrennelson143 isnt the Lyxor etf giving more than 4% now?

 

[simondesimone]

@stephenk Which one ?

 

[stephenk]

@simondesimone ticker in trading212 is XEON, is from Xtrackers not lyxor, my bad

 

[stephenk]

@simondesimone did you check? I think is 4.2% now?

 

[wrennelson143]

@stephenk But there’s USD/currency conversion involved?
If you decide, you can exchange everything to USD in your T212 account and get 5%.

 

[stephenk]

@wrennelson143 no, is a eur etf

 

[lisek]

@stephenk EUR or quoted in EUR?

 

[eastcascade]

@stephenk XEON tracks the ESTR less TER. ESTR is 3.90%. XEON yields about 3.80% net.

 

[stephenk]

@eastcascade are you sure about that yield? last month it did 0.35%
https://www.justetf.com/en/etf-profile.html?isin=LU0290358497#panorama-general

 

[lisek]

@wrennelson143 Personally and all-in for DCA and I rarely keep cash.

4% is somehing to consider, given that we don't expect stability on the markets. May be a 50:50 split (ETFs : cash) would be a good stategy as long as the interest rate is this high.

 

[hattington]

@lisek Bad idea. As I wrote elsewhere,

Stocks are high duration instruments. That means that they react positively to the expectation of lower interest rates.

Hence, holding cash on hand until rates have fallen means giving up on potentially large gains in the stock market.

All that for 4% annually lol. Would you do this if the rate was say 2.5%? If not, then you'd have to explain why that additional 1.5% matters that much to you.

 

[lisek]

@hattington My bank gives me 2.6% and I am not willing to lock my cash there. But 4% risk free return is something to consider. Probably for the next 6 months, why not.

How much would you get with an all-world ETF? 5.2% on average?

 

[hattington]

@lisek Return last month and half has been above 10% in usd terms alone

 

[wrennelson143]

@lisek Fair enough

 

[hattington]

@wrennelson143 Stocks are high duration instruments. That means that they react positively to the expectation of lower interest rates.

Hence, holding cash on hand until rates have fallen means giving up on potentially large gains in the stock market.

All that for 4% annually lol. Would you do this if the rate was say 2.5%? If not, then you'd have to explain why that additional 1.5% matters that much to you.