What will happen if your saving interest goes negative?

Have you ever thought about the scenario that you will be asked to pay money to save in the bank? I bet this idea has never occurred to you. You ask: is this possible? Well, a definite YES. The northern Europe country, Denmark, has had a negative interest rate in the past 2 years, i.e. the interest rate is below zero! So what will people do in a negative interest world? Try to think about it by putting yourself into their shoes. If you have to pay to save money, why you want to save money? Doesn’t it make more sense to borrow money to buy stuff? I also think so. Guess what? The Danish people are indeed the most indebted people in the world at the moment. When people are forced to borrow and spend, they will buy stuff like stocks, precious metals and real estate etc to reserve their values. In other words, the below zero interest rate policy will benefit the stock market and commodities in general.

Now this phenomenon is not limited to Denmark anymore. Actually the other European countries are also thinking to follow Denmark’s footstep to cut interest rates below zero, including Switzerland and England. Well, even the whole EU region will come into the negative interest rate world, since the European Central Bank is considering just to do that! So what will happen if more and more European countries go negative interests? Well, logically more people will borrow money and asset values will go up, including stocks. So buying European stocks is one of the logic ways to make money from this emerging development. You may ask: would it be too difficult to buy European stocks? Fortunately there is an easy way to do so: you can buy a basket of European stocks via ETF, FEZ. You may find more details about FEZ from my blog here.