Where to find decent interest on cash in Europe?

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Topic Author
TommyCapital
Posts: 8
Joined: Thu Jan 12, 2023 7:26 pm

Where to find decent interest on cash in Europe?

Post by TommyCapital »

Hi all,

I'm looking to earn some interest on my rainy day fund (~€40k, but currently still in USD).
I'm a bit lost on how to go about finding this, so if someone could point me in the right direction that'd be tremendously helpful.

I'm using IBKR as my broker.

The best I've found so far is 4% on Kraken (which obv doesn't have deposit insurance, but is arguably the most secure of all crypto exchanges).

Look forward to your insights and suggestions :)
Valuethinker
Posts: 49038
Joined: Fri May 11, 2007 11:07 am

Re: Where to find decent interest on cash in Europe?

Post by Valuethinker »

TommyCapital wrote: Fri Feb 17, 2023 6:45 am Hi all,

I'm looking to earn some interest on my rainy day fund (~€40k, but currently still in USD).
I'm a bit lost on how to go about finding this, so if someone could point me in the right direction that'd be tremendously helpful.

I'm using IBKR as my broker.

The best I've found so far is 4% on Kraken (which obv doesn't have deposit insurance, but is arguably the most secure of all cry** exchanges).

Look forward to your insights and suggestions :)
We are not allowed to discuss cry** here. I'd back a way a mile. Nothing in that ecosystem looks remotely "safe" to me.

Money Market Fund. Or Short Term Bond Fund. Or bank deposits.
jg12345
Posts: 427
Joined: Fri Dec 11, 2020 12:03 pm

Re: Where to find decent interest on cash in Europe?

Post by jg12345 »

Europe is a continent not a country

Where are you based?
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Bernmaster
Posts: 158
Joined: Tue Feb 18, 2020 1:29 pm
Location: Germany, Bavaria

Re: Where to find decent interest on cash in Europe?

Post by Bernmaster »

European banks have been slow to increase yields on bank deposits. Personally, I would not feel comfortable with my rainy day fund invested in the alternative you mentioned in the opening post.

A money market or short-term bond fund as mentioned by Valuethinker appears to be a very sensible solution. These are € denominated MMFs - all of them should do the trick.

https://www.justetf.com/en/find-etf.htm ... rrency=EUR
"The unsophisticated investor who is realistic about his shortcomings is likely to obtain better results than the knowledgeable professional who is blind to even a single weakness” ― Warren Buffett
EddyB
Posts: 2431
Joined: Fri May 24, 2013 3:43 pm

Re: Where to find decent interest on cash in Europe?

Post by EddyB »

Italy’s BancoPosta offers a 3,0% 270-day term deposit.
idc
Posts: 271
Joined: Thu Nov 26, 2020 11:50 pm

Re: Where to find decent interest on cash in Europe?

Post by idc »

Your savings are in USD. Doesn’t IBKR offer US Treasuries on the secondary market? Safest investment possible with decent interest rates and not taxed (by US if you’re not a US resident)

You will have to face exchange rate risk through, depending on the currency you expect your liabilities to be in.

But as others have mentioned, I would not keep my rainy days assets in anything other than strictly regulated institutions.
EddyB
Posts: 2431
Joined: Fri May 24, 2013 3:43 pm

Re: Where to find decent interest on cash in Europe?

Post by EddyB »

idc wrote: Fri Feb 17, 2023 8:28 am Your savings are in USD. Doesn’t IBKR offer US Treasuries on the secondary market? Safest investment possible with decent interest rates and not taxed (by US if you’re not a US resident)
OP, are you a US citizen or resident?
Topic Author
TommyCapital
Posts: 8
Joined: Thu Jan 12, 2023 7:26 pm

Re: Where to find decent interest on cash in Europe?

Post by TommyCapital »

Ah great, I wasn't sure about the tax status. Thanks for the suggestion.
Topic Author
TommyCapital
Posts: 8
Joined: Thu Jan 12, 2023 7:26 pm

Re: Where to find decent interest on cash in Europe?

Post by TommyCapital »

EddyB wrote: Fri Feb 17, 2023 8:37 am
idc wrote: Fri Feb 17, 2023 8:28 am Your savings are in USD. Doesn’t IBKR offer US Treasuries on the secondary market? Safest investment possible with decent interest rates and not taxed (by US if you’re not a US resident)
OP, are you a US citizen or resident?
No. Dutch citizen residing in Bulgaria.
Topic Author
TommyCapital
Posts: 8
Joined: Thu Jan 12, 2023 7:26 pm

Re: Where to find decent interest on cash in Europe?

Post by TommyCapital »

Valuethinker wrote: Fri Feb 17, 2023 7:11 am
TommyCapital wrote: Fri Feb 17, 2023 6:45 am Hi all,

I'm looking to earn some interest on my rainy day fund (~€40k, but currently still in USD).
I'm a bit lost on how to go about finding this, so if someone could point me in the right direction that'd be tremendously helpful.

I'm using IBKR as my broker.

The best I've found so far is 4% on Kraken (which obv doesn't have deposit insurance, but is arguably the most secure of all cry** exchanges).

Look forward to your insights and suggestions :)
We are not allowed to discuss cry** here. I'd back a way a mile. Nothing in that ecosystem looks remotely "safe" to me.

Money Market Fund. Or Short Term Bond Fund. Or bank deposits.
Okay gotcha, won't mention the c-word again!
DJN
Posts: 996
Joined: Sun Nov 19, 2017 11:30 pm

Re: Where to find decent interest on cash in Europe?

Post by DJN »

Hi,
the following section gives overall information on cash equivalents in the EU area for non US investors:
https://www.bogleheads.org/wiki/Cash_eq ... _investors
For individual rates you will need to research each bank or fund individually.
DJN
Yah shure. | Have a look at the Bogleheads Wiki in the first instance.
Topic Author
TommyCapital
Posts: 8
Joined: Thu Jan 12, 2023 7:26 pm

Re: Where to find decent interest on cash in Europe?

Post by TommyCapital »

DJN wrote: Fri Feb 17, 2023 11:35 am Hi,
the following section gives overall information on cash equivalents in the EU area for non US investors:
https://www.bogleheads.org/wiki/Cash_eq ... _investors
For individual rates you will need to research each bank or fund individually.
DJN
Thank you, this is precisely what I was looking for!
idc
Posts: 271
Joined: Thu Nov 26, 2020 11:50 pm

Re: Where to find decent interest on cash in Europe?

Post by idc »

TommyCapital wrote: Fri Feb 17, 2023 1:21 pm
DJN wrote: Fri Feb 17, 2023 11:35 am Hi,
the following section gives overall information on cash equivalents in the EU area for non US investors:
https://www.bogleheads.org/wiki/Cash_eq ... _investors
For individual rates you will need to research each bank or fund individually.
DJN
Thank you, this is precisely what I was looking for!
I am curious if US Treasuries are available at IBKR and if they are lower cost than other MMFs mentioned above. They are not always the most profitable, but these days they seem to be in US at least
DoctorE
Posts: 178
Joined: Thu Feb 13, 2014 2:11 am

Re: Where to find decent interest on cash in Europe?

Post by DoctorE »

Anyone successfully buy Treasuries at IBKR?
I saw some 4.9% annualized on the 6 month the other day.
Do they have 6-7 figure minimum trading sizes because I even tried to hit the ask on a few with $10k and I never got fills.
At Schwab Int'l it's super easy and get instant fills even at the bid or mid price.
TitanT2
Posts: 52
Joined: Tue Oct 25, 2022 6:32 am

Re: Where to find decent interest on cash in Europe?

Post by TitanT2 »

TommyCapital wrote: Fri Feb 17, 2023 1:21 pm
DJN wrote: Fri Feb 17, 2023 11:35 am Hi,
the following section gives overall information on cash equivalents in the EU area for non US investors:
https://www.bogleheads.org/wiki/Cash_eq ... _investors
For individual rates you will need to research each bank or fund individually.
DJN
Thank you, this is precisely what I was looking for!
How would you put the information from the link to use?

How would you compare variouos alternatives listed, and what would you end up picking (buying) at the moment?
Valuethinker
Posts: 49038
Joined: Fri May 11, 2007 11:07 am

Re: Where to find decent interest on cash in Europe?

Post by Valuethinker »

TitanT2 wrote: Sun Feb 19, 2023 3:31 am
TommyCapital wrote: Fri Feb 17, 2023 1:21 pm
DJN wrote: Fri Feb 17, 2023 11:35 am Hi,
the following section gives overall information on cash equivalents in the EU area for non US investors:
https://www.bogleheads.org/wiki/Cash_eq ... _investors
For individual rates you will need to research each bank or fund individually.
DJN
Thank you, this is precisely what I was looking for!
How would you put the information from the link to use?

How would you compare variouos alternatives listed, and what would you end up picking (buying) at the moment?
I would look at 3 things:

- net interest rate (after tax)
- deposit insurance protection (and which national government backstops it (& what their credit rating is))
- credit rating of the financial institution
daviddem
Posts: 275
Joined: Wed Jul 06, 2016 12:53 pm

Re: Where to find decent interest on cash in Europe?

Post by daviddem »

You already earn interest on your USD cash balance at ibkr. How much depends on the total NAV of your account (including non-cash investments): https://www.interactivebrokers.com/en/a ... -rates.php

You could improve that by purchasing a usd money market mutual fund such as Invesco USD liquidity portfolio (but the min purchase is usd 150,000) or a usd ultra-short bond fund or etf.

To be noted however that at some point, the US will pause its rate increases while the EU will continue theirs. At that point, Euros will become more expensive to buy with your dollars. So at the point you think the US will stop rising its rates might be a good time to exchange your dollars for Euros.
thermo
Posts: 41
Joined: Sat May 30, 2020 10:32 pm

Re: Where to find decent interest on cash in Europe?

Post by thermo »

Pimco MINT LN.
daviddem
Posts: 275
Joined: Wed Jul 06, 2016 12:53 pm

Re: Where to find decent interest on cash in Europe?

Post by daviddem »

thermo wrote: Fri Mar 10, 2023 5:53 pm Pimco MINT LN.
This is a US-domiciled ETF. For most non-resident aliens, it is a bad idea to purchase US situs assets as there are tax traps (withholding tax and estate tax). There are exceptions for residents of countries that have favorable tax treaties with the US, but they are few and far between. See these links:

Nonresident alien investors and Ireland domiciled ETFs

Non-US investor's guide to navigating US tax traps
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