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Comment by yreg | Hacker News Reader

Mildly related question: European tech workers, what are you doing with your (monthly) savings?

Hoarding euros? Converting to USD? $SPY? Gold? The same as always?

Diversified stocks and bonds, same as always. When it goes up, you get return on what you have already invested so far. When it goes down, you are buying at a discount. I am not trying to time the market, but create some capital for my retirement in 30 years, so whatever happens in the next 5/10 years is mostly less irrelevant. There have always been crisis, and there will be others.

I"m still waiting to bit to buy at the best discount. Middle of winter seems to be the best time to invest.

Stocks, bonds, gold, new car. Maybe buying a house, as long it is going down.

> The same as always?

This. Yes, there's about 8% inflation in Germany but for people with higher incomes, it's not that bad (yet). My ETFs/stock portfolio has even gone up after a ditch when the war started, no real need to worry.

Diversified as always. I moved to a rural area 10 years ago, so firewood is always a must. Also plenty of land. Also any tools that I think I would need. Savings only in BTC and some physical gold. No stocks or fiat.

Long SPY and as a consequence USD.

Probably makes sense to pay off your mortgage if you have one.

Why would you do this in a time of high inflation?

Ideally, so you have a place to live, regardless of the outcomes and influences of inflation et al.

Sure, buying real estate is seen as an investment, but it's also a spot to live and to keep all stuff to help or hedge your enjoyment of life.

Some people just want to live, debt free, and be left alone.

I am concerned with having a place to live, as distinct from preserving my current home.

If I ever have to leave my doomed home with only what I can carry, I'd rather owe as much as possible at that point in time. I think that debt owed to human beings is strictly better than the same amount of equity just vaporized with no possible recourse.

During an inflation your salary is likely going up, and so are all other assets that you own or buy.

Let's say you owe 100000 EUR for a 200000 EUR house, pay 2% interest, inflation rate of 10%. Your net worth is 100000 EUR in the first year.

If you repay 8000 EUR, the next year you owe 92000+2%*92000=93840 EUR and your net worth is 220000-93840= 126160 EUR.

If you repay 4000 EUR and invest 4000 EUR in gold, next year you owe 100000-4000+2%*96000=97920 EUR, your gold is worth 4400 EUR after inflation and your net worth 220000-97920+4400=126480 EUR. Plus you have improved liquidity.

If the inflation rate is higher than the interest of your loan, it's often better to invest in inflation-proof assets.

In times of uncertainty and volatility and especially inflation, if you have enough money to pay off your mortgage, you might not want to actually pay it off.

Assuming you have a fixed rate mortgage at a low interest rate, not only will the value of your debt be inflated away, but you retain optionality. Meaning you can use that big chunk of money as a hedge against a job loss or other negative event, you can use it to invest as your see opportunities, etc.

Of course the flip side of this argument is if you do pay off the mortgage, you get a guaranteed rate of return equal to your mortgage interest rate.

30 year fixed rate mortgages is specifically an American thing. Not sure this is the case in all European countries but I’ve heard that they typically have much shorter terms and/or variable rates.

At least in France 15-25 year fixed rate housing loans (technically it's not a mortgage because you don't guarantee the loan with the housing directly, there's an intermediary insurance to guarantee that will fight you over the housing if you stop paying) is pretty much the norm.

Poland is great example of this - fixed rate mortgages are almost nonexistent here. When inflation hit and the Monetary Policy Council rose intrests rates by 6,5 percent it doubled monthly installments of many people. And rates are still off by 10 points from real inflation. If they would rose those rates to the real values it would probably bankrupt hundred thoused people here.

If paying your energy bill or losing your job is going to be an issue you don’t want to put a huge sum of cash into an illiquid asset like a house. You want that cash to remain available.

Unless you have a fixed mortgage. In that case the bank takes the hit for you.

I'm luckily paid in dollars, so I keep dollars and just small amount (few months worth expenses) in local currency, bought apartment without mortgage and have other big money in mixed stocks, but mostly US. When in crisis always go for US since they are independent and isolated.

Hoarding euros would be horrible idea, euro will go lower, should keep only necessary amount in euros and keep everything else in USD.

> euro will go lower,

And German and other eurozone exports will increase. It is temporary bad for EU citizens but in the long run I don't see economy suffering as much as fearmongers predict

What is EU exporting outside EU in sectors where are employed many people? Doubt some cosmetics will save us.

i have always invested in US equity (who do you think is propping up US stocks? haha) . my european equity from many years ago is down. I dont think it s a good idea to keep cash when euro is weakening and recession is coming. It will not last forever, but must hedge around it

If you can speak about savings, then you are fine.

All in China equities

China is on the verge of recession themselves

US has probably allowed China to have Russia for breakfast when things turn to shit there

Just going from 6% to 3% is not a recession. It's still the strongest economy by far.

I'd bet $100 China will be in recession within 2 years

Crypto!

Is it still relevant after the coming ETH merge? The way I see it, if crypto moves to PoS, it becomes very centralized and simply a playground for whales. I see it as a Bitcoin (hard money) versus fiat currencies game, with crypto falling under "fiat".

> it becomes very centralized and simply a playground for whales

So the same as it is now basically.

The same, just more obvious. At least they used to have a somewhat plausible narrative going.

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