For ordinary people, it is very necessary to prepare for a rainy day.

Written by Chen Bai

Bank deposit rates have fallen again.

existICBC、ABCIn the latest official deposit interest rate tables of several major banks, the listed interest rates for three-month, six-month, and one-year lump-sum deposits and withdrawals have all been lowered to 1.05%, 1.25%, and 1.35%, respectively; the listed interest rates for two-year, three-year, and five-year lump-sum deposits and withdrawals have also been lowered by 20 basis points. Even if you deposit for five years, the highest deposit interest rate is only 1.8%. In addition to lump-sum deposits and withdrawals, the annual interest rate for demand deposits has also been lowered.

Now, taking a deposit of 1 million yuan as an example, even if it is deposited for five years, the final interest will be reduced from 100,000 yuan to 90,000 yuan, a decrease of 10,000 yuan. According to this income, in the long run, it will not even keep up with the CPI, and saving one more day will be a loss. If we compare it with the nearly 10% broad liquidity (M2), if ordinary people choose long-term fixed deposits, it is not much different from doing charity.

Of course, this is also the reason why deposit rates have been lowered again and again - to cope with deflation risks and stimulate economic growth.It is generally believed that in the case of insufficient demand, lowering the savings rate can encourage people to spend money to stimulate consumption and promote investment.

But the question now is, will the enthusiasm for consumption and investment increase if the deposit interest rate is lowered?

The impact of lowering deposit interest rates on promoting consumption is still unknown. However, the obvious change is that the popularity of deposit strategies to cope with falling interest rates has skyrocketed.

For some time, money saving guides have been popular on major social platforms.

Compared with consumption, this generation of young people is undoubtedly more interested in how to save money.On some social media platforms, posting about your savings progress often becomes a hot topic. There are endless tips on saving money and keeping accounts, such as "Challenge to save 50,000 in 4 months" and "Finally saved 80,000 after working for two years".

Lie down, oppose involution, be a "special forces soldier"... This generation of young people, who should have taken over as the main consumer group, are instead refusing to listen to advice.

01

The other end of residents' savings is first consumption. Many people believe that the reason for the increase in the savings rate is insufficient consumer supply, that is, there is not enough stimulus to promote consumption.

Looking back at the consumer market over the past five years, we will find that this may just be wishful thinking.

actually,In the years before 2018, the vast majority of people believed in the "consumption upgrade" narrative.

As the per capita income level continues to rise rapidly, the middle class continues to expand, and high-quality consumption demand is considered mainstream. As a result, a number of consumer upgrade brands have emerged, the most representative of which are high-end consumer brands such as Heytea.

Back then, the "outside the fifth ring road market" was still a curiosity. Apart from Huang Zheng, few people believed that it would be the future mainstream trend of domestic consumption. From e-commerce to brands, everyone is trying to launch their own membership payment model to provide better options for high-quality consumption.

A landmark turning point is theFuling Pickled mustard tuberPrices of consumer goods represented by Tajikistan began to rise.

At that time, there was a controversy over whether consumption was upgrading or downgrading. Some people believed that Fuling Zhacai was a manifestation of consumption downgrading; at the same time, some people believed that even the Taki market had begun to upgrade its brand and price.

There was no clear answer to the controversy at the time, but looking back today, the trend couldn’t be clearer.Once upon a time, we also had supplies to meet upgrade needs, but they ultimately lost to reality.

Today, no one mentions the “market outside the Fifth Ring Road” anymore, because investors and consumer product entrepreneurs have suddenly discovered that the “demand within the Fifth Ring Road” scenario is disappearing rapidly.Nayuki's Tea, but in the end it was still no match for Mixue Bingcheng which only costs a few dollars a cup.

In other words, it’s not that young people don’t have places to spend money, but when faced with price and quality, they ultimately choose price.

For this reason, it is not valid to infer insufficient consumption capacity from insufficient supply - demand is the cause and supply is the result, and what can be stimulated by supply is essentially the demand that has existed for a long time but has not been met.

If one has money and feels secure, everyone will be willing to spend without any incentive.

02

In addition to the impact of consumption, another reason for the increase in savings rate is the shortage of high-quality investable assets.

In recent years, deposit rates have been falling again and again. But after a brief decline, the savings rate quickly rebounded.

According to the latest data released by the central bank for the first half of 2024, as of the end of June, the total amount of RMB deposits increased by another 11.46 trillion yuan, of which household deposits increased by 9.27 trillion yuan, and the balance of household deposits was approximately 147.15 trillion yuan.

To sum it up in one sentence, even if the deposit interest rate keeps falling, it will not affect my continued savings.

One important reason for the recovery of savings under low interest rates is the lack of growth assets.

In the past two years, the "asset shortage" has been a controversial topic in the industry, but in fact this is not only a dilemma for institutional investors, but also a dilemma for personal household balance sheets - in the past, savings could be converted into real estate, but now who dares to buy a house easily?

From the perspective of investors, deposit rates have been falling again and again. The 7-day annualized returns of money market funds such as Yu'e Bao, which many people used to be fond of, only fluctuate around 2%. In addition, the real estate market is at a low point in the cycle, and the equity market is rotating too quickly, making investment more difficult. The possibility of achieving substantial appreciation is getting smaller and smaller. If you can maintain value and avoid losses, you are already considered an investment expert.

In the stock community, the hottest investment joke in 2023 is——

At the beginning of this year, one of my three friends sold a house to invest in stocks. As of December 15, he lost 50%, but found that he could use the remaining money to buy back the house he sold. Another sold stocks to buy a house, and also lost 50%. As a result, he found that he could buy back the stocks he had previously sold by selling the house. The third sold a house for 10 million yuan and deposited it in the bank. Not only did he earn interest, he also found that he could buy back the house at a 20% discount, making a net profit of 2 million yuan.

Although the joke is just a joke, it clearly explains why people still want to save money even though the deposit interest rate is so low.

03

But the not-so-good news for savings enthusiasts is that the current 1% interest rate may just be the beginning.

Many people lament that the era of 4%-5% annualized deposit yields is gone forever. Looking at it today, this is indeed an unrealistic imagination for a long time in the future. You think that the annual interest rate starting with "1" is the lowest in history, but in fact, in some countries, depositors have to pay money to the bank, not to mention interest.

From historical experience, in order to cope with deflation risks and promote the economy, Denmark, Sweden and Japan have implemented negative interest rate policies to varying degrees. Negative interest rates mean that banks need to charge depositors to hold their deposits instead of paying traditional interest.

The likelihood of implementing negative interest rates increases if the central bank believes that negative interest rates are necessary to achieve specific economic goals (such as raising inflation or promoting credit growth).

Of course, returning to the domestic market, the possibility of negative interest rates is not great. In comparison, measures such as quantitative easing and targeted reserve requirement ratio cuts may be given priority.

However, for ordinary people, it is still very necessary to prepare for a rainy day.

Faced with a reduction in deposit interest rates, there are still some options. For example, the endless stream of deposit guides proves that the people's wisdom in saving money is still unlimited.

In addition, try to improve your financial knowledge as much as possible and open up your mind. For example, buying long-term government bonds, US dollar financial management, etc., are still good options in the current market environment.

Having said that, in a period of increasing downward pressure on the economy,The best investment actually comes back to investing in yourself.

Learning more skills, even learning more languages, is a truly valuable "investment" option in the long run.

We cannot change the cycle, but we can try our best to ensure that we have the ability to cross the cycle.