/biz/ - Business & Finance

>>12110540
You literally can

>0 risk
lol
retard

>>12110540
this is what big boy investors do with their money every day. its just being brought to the prole masses now.

>>12110540

>bank fails
>get back $250k of your $1m

Yea but inflation really cuts into that. Would you even break even?

pleas use my invite frens

https://share.robinhood.com/cs-dVQFam7gKef3dj5ZcFaF47

>>12110565
>>12110565
inflation is historically less than 3%

>>12110540
Sure I can
>invest in $30,000 in TQQQ
>Make a $1,000,000 a year with 0 risk.

>>12110540
>Vulnerable to inflation
>Vulnerable to changing interest rates
That money could easily lose value faster than it earns interest.

I'd wait for competitors to step up and offer more.

>>12110556

It's interest, retard. It's not an investment.

>>12110557

It's a healthy institution

>>12110557
>get back $250k of your $1m
better than crypto

Positive interest rate with 0 risk doesn't exist. How will the interest be generated? If you want passive income distributed daily in the future, check out SAFEX.

>>12110602
>It's interest, retard. It's not an investment.
That 3% is going to come from them loaning your money to other people. I consider that to be a form of investment. The only difference between this checking account and an ultra-short-term bond fund is that if everyone in the world suddenly defaults on their loans, the government will swoop in and pay out insurance money.

>>12110574
>inflation is historically less than 3%
There are some glaring exceptions to this. This board is full of people who are too young to remember the 70s.

>>12110601
>I'd wait for competitors to step up and offer more.
Nobody is going to be willing to go much higher than the federal funds rate. If the fed raises rates, RH and their competitors will all follow suit.

>>12110602
Came here to say this >>12110804.
Watch OP not accept it

>god tier
green
>okay tier
white
>pleb tier
black
>56% tier
stars & stripes

bump

>>12110804
>Nobody is going to be willing to go much higher than the federal funds rate

thats bullshit tho. the margins in banking allow for much better terms on the side of the customer. we're getting gouged.

>>12110540
Already signed up for this.

>>12110804
>There are some glaring exceptions to this. This board is full of people who are too young to remember the 70s.
Yeah because in 71 the dollar was no longer backed by gold and the US could print whatever amount they wanted.

>>12110580
Redpill me on TQQQ. Is it just a leveraged technology index? I take it, it's a buy and sell and not a buy and hold?

>>12110540
>put $1,000,000 into well-diversified dividend etf like SDY
>reap $24k annual dividend payment without touching principal
>principal keeps up with inflation unlike cash in savings account
>no real risk of losing principal because fed always cuts interest rates when the stock market goes down too much. meanwhile the $1,000,000 in the savings account pays almost no interest when the fed cuts rates.
Being able to get 2-3% in a savings account is only a recent phenomena and may not last long if the fed stops tightening. For most of the time since the last global financial crisis savings accounts paid almost no interest due to the fed rate cuts.

its not fdic insured retard

>>12110580

baby still yet to experience his first recession

>>12110540
Inflation you stupid nigger

Betterment seems like a better way to go if you just want to park money and take a little out each quarter to live off. Not sure I'd trust this one.

>>12110602
>It's a healthy institution
Said the lehman bros customer in 2007

So if i only throw 250k in or less theres literally no risk because if RH dies ill be refunded?

>>12110569
what do invies/refs do?

>>12111152
yeah that's the current FDIC max. i doubt they'll actually offer 3% if the fed funds rate stays where it is. they'll probably say they expected the rate to be higher but it didn't turn out that way. this is just a ploy to garner interest

>>12111152
yeah

>>12111060
>hats bullshit tho. the margins in banking allow for much better terms on the side of the customer. we're getting gouged.
Even though your right, the banks are supposably holding on to ~1% reserves in some cases...They have bet the funds in 'your' account. on a 1:100 bet...Don't worry their are not degenerates.

They need as much liquidity as possible to keep the daily transactions going.

>>12110557
Ok then 250k in 4 savings accounts

>>12111246
i prefer to be optimistic and believe that someone has used technology to do one better than the boomer banks we're used to. i won't be surprised if Webull follows suite.

>>12111169
Or they could just be investing in money markets

>>12111309
those are under 3% too. the fuck are you talking about

>>12110804
>That 3% is going to come from them loaning your money to other people.
actually it's going to come from treasury bonds.. the service is being offered through a broker deal so technically it's not a bank.. it'll basically be a money market account.

>>12110580
You could do better with LCI

>>12111372
> it's going to come from treasury bonds.. it'll basically be a money market account
10-year treasury bonds are only paying 2.9% right now. Money market accounts typically invest in bonds that are < 6 months from maturity. That is why almost all money market accounts are paying < 2.5% right now.

As far as I can tell there are only two ways Robinhood could pay 3% and still make a profit.
1) Buy ultra-long maturity treasury bonds. Most money market funds don't do this because they don't want to get anally fucked if interest rates increase.
2) Do something with the money other than buying treasury bonds. Yankee bonds and lending it to people as "robinhood gold" money both seem like likely candidates.

I haven't seen any official statement about how they're planning to invest people's money. DESU, I don't really care so long as it is insured by the government.

I can beat it actually

>put 33 million into savings account
>make a million/yr in passive income with 0 risk

Only problem is I'm not at 33 million yet

>>12111638
just listen to co CEO

https://www.cnbc.com/video/2018/12/13/robinhood-offering-checking-savings-accounts-interest-rates-three-percent.html

i was reading in an article that the 10yr is 2.96% and 30 yr 3.16%?

It'll also be SIPC insured instead of FDIC...

>>12110540
The only reading they would start this is because every stock is tanking atm

when is robinhood IPO coming out

would go all in

>>12111694
>https://www.cnbc.com/video/2018/12/13/robinhood-offering-checking-savings-accounts-interest-rates-three-percent.html
>"Treasuries AND GOVERNMENT GRADE ASSETS"
It ain't just treasuries. "Government grade assets" isn't a commonly used term and doesn't have a strict definition. I assume he means anything AAA rated. Yankee bonds are still a likely candidate. There are money market funds such as VMMXX that are less than half treasuries.

>i was reading in an article that the 10yr is 2.96% and 30 yr 3.16%?
As of today, 10-year treasuries pay 2.91% and 30-year treasuries pay 3.16%. It changes a bit from day to day. 6-month treasuries are only paying 2.56%. Most money market funds buy 2-3 month bonds which pay even less than that. I've never heard of a money market fund buying bonds that are years from maturity.
See: https://www.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yield

>>12111703
id go all in too

Robinhood could also become one of the first platforms to really integrate crypto currency into everyday life.

>>12110540
>not FDIC insured
Repeat after me: aaaaaaaaaaand it's gone

>>12111933
imagine literally storing your money in a southpark meme

>>12110540
>tfw an app causes the next major financial crisis

>>12111933
SIPC insurance is just as good. If they don't pay up then the US dollar is worthless.

>>12111963
>Offer checking accounts paying 3%
>Invest 99% of the customer money in junk bonds.
>Invest the remaining 1% in treasuries just so that you can honestly tell reporters you are invested in treasuries.
>Become the biggest financial institution in the US because you offer the best rates
>Massive debt bubble forms because of all the retards who put money in your bullshit checking accounts.
>Debt bubble pops
>Govenment attempts to rescue your customers by printing a shitton of money
>The value of the dollar plummets
>Eveyone starts using crypto because its value is more stable than the value of fiat

This sounds like a crypto NEET's wet dream. Fortunately, it will never happen.

>>12110540
Might want to google “inflation”. The only thing that matters is real returns. You’ll never get rich by earning approximately the risk free rate.

>>12112065
HAHA NO RETARD btc goes down to double digits and your shit posting cant stop it, wow seriosly whats with all those deluded fucking idiots on this board omg

>>12112083
Did you even read my last sentence? I explicitly said it wouldn't happen. I don't even want it to happen (I'd probably lose my job). I just posted that because it was entertaining to think about.

>>12112129
>haha i was only trolling all along

>>12111034
black is better than white imo, but i agree that green is the best, simply iconic

>>12111096
I just looked at that chart and holy fuck I want to all in this.

>>12112378
Tech seems overvalued and the Nasdaq is essentially an index of tech stocks. Plus it's leveraged so you can lose your ass as quickly as you can get rich.
Not to mention, looks like a head and shoulders forming on the macro level. As tempted as I am, I'd be cautious about this sort of speculation.

>>12110569
Fuck off David.

>This is the co-CEO of robinhood
I'm having second thoughts about using this app. I wonder if we'll all get PAJETED.

>>12110540
Do you know what it's called when something other than a government or a bank offers you unrealistically high returns in exchange for a large deposit?

It's called a Ponzi scheme, Anon.

>>12111133
TQQQ will almost always recover your entire investment (minus costs) when the index rebounds to your buy in level, assuming it happens in reasonable amount of time.

Just start dollar cost averaging down when the index is 40% off it's highs, you literally can't lose money this way, unless you believe the index will never go up past your buy-in level.

You can start selling off, once the index breaks a new all time high. Since your highest buy-in is 40% off the previous ATH, you will at least 4.5X your initital investment minus fees when the index breaks the ATH, if you average down you will get 5X+ your money back since the lower your buy in, the more amplified your returns are.

If you get lucky and perfectly time the bottom and ride the bull wave, your portfolio could 50X, but that would just be greedy to expect.

Anyways, going in on TQQQ is a bet that the index will trend up over time, with relatively low fees since you're using futures/swaps, getting the benefit of 3X inflation tailwinds reduces your fees on a real basis.

With the tailwind of inflation offsetting your fees, you should reasonably expect to outperform with TQQQ or a SP500 leveraged daily ETF if you can hold out the swings. It's actually a solid long-term strategy if your investment horizon is 30+ years.

I'm unironically going all in on TQQQ when the index drops 40% and averaging down. As long as I have iron hands, I should get 5-20X my money back in a bullrun, depending on how lucky I get with the timing, and if I hold to retirement, probably 200-500X my initial deposit.

Since exchanges literally get shut down when the market drops too much, I have almost 0 risk of permanent capital loss. The largest critics of leveraged ETFs are academics that believe in the CAPM, and say that risk adjusted returns of leveraged ETFs are shit. However, at the end of the day, the index cannot fall 33% because they will shutdown the exchanges long before that.

>>12110565

Ahaha, AHAHAHA yeah, if by inflation, you mean the CPI. But no, inflation is not 3% LMAO. They literally do shit like look at computers one year, and the next and say even though it cost 10% more its 13% more GHz so inflation is 13%, according to the government. That's why they think its 3%. In reality it takes 10x less effort to make things today than 50 years ago do to technological improvements in automation, manufacturing, transpiration, etc. but things cost 10x more. REAL inflation is closer to 10%/year.

>>12112501
It feels unwise but you're convincing me.

>>12112065
You're right, but they will probably put the money in commerical paper and not junk bonds kek.

>>12112501
You've fucking sold me. I'm 23 so don't give a fuck if I lose my money. I'm DCA'ing but only because the overall market is in a dangerous spot right now. I only have 10k so probs 2k buys

>>12112556
t. retard who doesn't understand how the CPI works

>>12112557
There was a thread on Reddit where some guy calculated the return, if you invested each year since the 1950s. You were only down today if you were stupid enough to invest at the peak of the dotcom bubble, and generally once the recession/bear markets ended, you always made your money back.

I think the secret to these ETFs is to either dollar cost average, and literally never sell until you have enough to retire, or try to time the bottom and average down from there, although you could miss a lot of gains doing this.

However, it's fine if you are missing a lot of gains before the stock market crashes because you can invest the money in other shit and do reasonably well in the meanwhile.

Right now, I'm doing a value investing strategy which has outperformed the index over the past 3 years. I will probably continue to do that, until we find ourselves 40% down from all time highs, or so and then unironically all in on TQQQ.

People will think I'm retarded and it sure will seem that way if the index goes down 60-70%, but as long as I keep adding to my position on the way down and until were back at the all time highs, I will make an absurd amount of money.

what rank are you boys at
42k here
also, fuck people with friends, went back 6000 places

>>12112611
I'm planning on saving more money until this current bubble crashes but when it does I might unironically put a lot into TQQQ. Thanks anon!

>>12112589

That's 100% how it works. They look for every way to value newer products more to make it seem like inflation is less. Even though newer products are usually lower quality due to mass production, and take less than 1/10th or less the effort they would have 50 years ago. They still cost more, not just in terms of dollars but in relation to wages.

>>12112639
> They look for every way to value newer products more to make it seem like inflation is less
Uh-huh. 0 evidence for this other than some retard on /biz/ speculating about shit he doesn't have first-hand knowledge of.

>>12112574
I would avoid leveraged ETFs until were actually like 35-50%+ down. Generally you will get absolutely destroyed as the strategy returns relies on buying in after growth stocks fall out of favor, otherwise if we are in some sort of bubble at this point, you won't have to wait 20+ years to get your money back. I think valuations aren't so bad given interest rates however, but interest rate normalization could send them down a lot...

Imo, 40% down from ATH is a level where I feel that I won't miss buying into the next recession, whenever that may be. We had >40% down in 2001, and 2008. My gut tells me we will probably drop 50%+ during the next recession, but I don't wanna miss out on the next massive bull market, so I think starting to pile money into TQQQ when the NASDAQ is down 40%+, is a solid bet.

Just hold and don't sell until you're so rich that you don't have to work anymore. Try to figure out how much money you need, and be realistic about when you are going to sell. For example, don't do something stupid like try to sell your TQQQ when the NASDAQ doubles it's previous ATH, because you might have to wait 30+ years.

Alternatively, if you don't care about early retirement, just load up on TQQQ in your Roth IRA or whatever, and all in on that shit. You will probably have 10m+ by the time you're retired if not much more. The math is just on your side. After maxing your retirement accounts, all in your disposable income into TQQQ in your brokerage accounts for a few million more.

>>12110540
What’s the difference between sips insurance vs fdic

>>12112633
It sounds retarded and people will shit on the strategy, because you can be down like 90%+ on your initial investment in a crash, but remember that compound interest works both way, and you'll 50-70X that amount on the way up.

>>12112716
*sipc

>>12112556
10% a year is way too high, I’d say closer to 6%

The government is lying though, no way it’s only 2/3%

>>12112723
Whatever the inflation is. There's also taxes so the actual net profit you're getting is like nothing.

>>12112710
Dangerous advice in a future where US stocks may only return below average to average returns.

"Past results do not guarantee future results"

>>12113115
Perhaps, but people have been saying the same thing since the 80s, and the strategy works because typically futures borrowing costs track short term inflation expectations.

If you start this strategy at <30 years old, you'd have to be one extremely unlucky motherfucker to lose money by the time you're eligible to retire or access your 401K/IRA.

This strategy is only bad if you don't have the stomach, to be down 95% on your initial investment and keep adding to your position.

There was a simulation done of this strategy, and the only people who are down right now after fees are people who bought at the peak of the internet bubble. Just start buying when people are panicking instead and you should be fine. Then again, you can dollar cost average starting now, and you'll probably still be rich as fuck when you retire 35-45 years.

This is kinda funny

>>12111971
In the Madoff fraud, where securities had allegedly not actually been purchased, SIPC and the SIPC Trustee challenged and disposed of the claims of approximately one-half of customers of the Madoff firm, arguing that over the course of time those investors had withdrawn more funds than had been invested, resulting in a negative "net equity", and, therefore, not eligible for SIPC protection

>>12112720
>compound interest
>on a product with no interest/dividend

biz

>>12113188
>This strategy is only bad if you don't have the stomach, to be down 95% on your initial investment and keep adding to your position.
You shouldn't be giving investment advice.

>>12110540
That $30k has to go entirely to offset inflation. It's not income. With stock that in theory should be covered by the company rising in value. The dividends will be your income.

>>12113238
nice

It's literally only two months at 3% and then it drops to 0.5% and I guarantee they have some kind of restriction to stop it from bring abueed

>>12113709
source?

>>12110557
Straya has their money in banks backed by the govt so this isn't an issue

>>12113709
Source?

>>12110540
>We're going to daytrade with user funds
>Nothing can possibly go wrong

>>12113833
>backed by the govt so this isn't an issue
top keks if you believe in the 'banks are insured by the gov' meme
That policy can only pay out 1% AT BEST.

Stop parroting some NPC BS

>>12112466
Also
>California based
>Not Nottinghamshire based

REEEEEEEEEE

Buy SAFEX you plebs.

The currency can get undervalued.

30k a year won't be livable at some point due to inflation.

>>12110540
>what is inflation

>>12110574
If you go by official government statistics , but if you go by official government statistics Henry Ford was paying his employees below the current minimum wage (yes adjusted for inflation) and everyone was freaking the fuck out thinking he was crazy for offering that much.

>>12110540
Isnt that 3% only for 2 months? As a promo?

Ally online banking is like 2.65% now and will rise with interest rate increases. That's a pretty secure and easy interest place to park some money.

>>12111372
isn't /smg/ the containment for your faggotry and horrible shilling.

>>12111915
Not just crypto they could end up being the go to company for all fintech stuff. Stocks, bonds, crypto, maybe real estate and other stuff.

>>12111034

For folks trying to understand this, some context which may be useful:


Checking accounts are loss leaders virtually everywhere, the exception being smaller community banks. Their primary revenue stream was, once upon a time, net interest income, but these days due to the extremely low interest environment and alternate sources of funding the revenue stream is more weighted towards fees (primarily NSFs, although that was hit a few years ago) and debit card interchange.

Robinhood also likely expects to not become the park-your-money account of choice for older dentists but rather to become the spend-your-money account for their millennial userbase. With high velocity of money and low balances the interest expense is minimal and, to the extent they use debit cards, the interchange revenue can be material. (In a stylized example where someone makes $2k a month and spends $200 on debit card purchases and $1.8k on rent/etc the interest cost for the year is ~$30 and the debit card interchange for the year is ~$60, even ignoring potential interest revenue.)

This is roughly in the same line as their core strategy, which is spending what would otherwise be a marketing budget on keeping commissions at zero, making money on the other ways brokerages make money. If you do not understand how a brokerage makes money, I encourage you to peruse the annual reports of e.g. eTrade or TD Ameritrade, which will happily explain their revenue sources and why commissions are a surprisingly small portion.

Metacomment: neets who believe they have outmathed a financial firm should ask themselves "Are financial firms likely to be bad at math?" and "Are financial firms incapable of hiring their own neets?"

>>12110540
Inflation is MIN 2% per year so they’re really offering 1%. Better than nothing I guess.

Help me not get bogged
https://share.robinhood.com/artemd26