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Comment by titanomachy | Hacker News Reader

You can currently get a 5%-interest savings account with some quite reputable firms (Morgan Stanley, Robinhood, Wealthfront). Those are effectively risk-free ways to earn more than 4%.

I think the 10-year treasury note rate underestimates things a bit. Maybe it's because there is an assumption priced in that interest rates will go down again?

But the point stands: right now, anything offering you more than 5% return must have some risk involved.

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Off topic, but as a finance nerd I want to point out that if you know you won't touch your money for 10 years and put it in a savings account paying 5% you are bearing "duration" risk. It's possible that interest rates will fall a lot and by failing to lock in a 4% return you end up with less money at the end of 10 years. (Just a technical note! You probably shouldn't buy 10 year treasuries!)

> Maybe it's because there is an assumption priced in that interest rates will go down again?

Yes, exactly this. The 1-year treasury pays 5%, so it's appropriate to look at that instead.

Normally the 10-year pays more than the 1-year, so it's safe to look at that; we're currently in an unusual state (an "inverted yield curve") where it doesn't, and people tell you this is a surefire sign of a coming recession.

Yeah and really for most people that risk with those FDIC insured banks is effectively zero so backstopped by the fed anyway.

5.4% from a Goldman Sachs CD promotional rate. That is as risk free as anything else.

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