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Wednesday, December 8, 2010

Is "not losing" the new "gaining?"

A story in the New York Times last week inspired the question in the above headline; interest rates on most savings accounts and investment instruments are very low. Click here to read the full story.

Implications: I’m certainly not the only person whose IRA took a beating throughout the recession. But now, I’m wondering whether that pounding has created a different paradigm in folks like me: Do we feel really good… just because we’re not getting punched?

That seems to be plausible, given the fact that folks are prepared to tolerate such low rates on their savings instruments these days. But even if I don’t make a dime this year on my savings accounts…

It will be more profit than I’ve made in the past three years.

Can completely different options—different from stocks, bonds, CDs and other investment options—be terribly far away? (Will individuals be tempted to invest in small enterprises, rather than public companies? Will we see more peer-to-peer lending? What other options could pose a threat to conventional banking, savings and lending relationships?)

Mike Anderson

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