As an accredited investor you often reserve some time to review your finances. The equity in your home, your income tax strategy and the performance of your investments. Looking back over the years you may have found that most of your investments, regardless of your strategy have beennegative interest rate somewhat stagnant.

Our economy just hasn’t been helping out the equity investor and the low interest rates have hurt the fixed income retiree or those that depend upon a steady return from their investments for living expenses as well as creating still more wealth. Low interest rates have been with us for several years now, but have you heard of negative interest rates? It seems Europe has.

Global markets have been anticipating an announcement form the European Central Bank of yet another round of lower rates, one of the reasons why U.S. Treasuries and mortgage-backed securities have been doing so well over the past several weeks. But the ECB didn’t just lower them, they created a negative rate for holding onto deposits. This has never happened before and in effect charges banks 1.00% for sitting on cash instead of lending it out. The ECB also cut is main interest rate by 10 basis points from 0.25% to 0.15%.

Banks around the world, as well as other financial institutions and businesses are holding onto cash rather than lending it out. And the ECB is “encouraging” banks to turn those liquid holdings into business and personal loans. The banks will now weigh which is riskier, issuing loans or paying the 1.00% fee.

Of course, you’re not a bank and you do not have to pay 1.00% for sitting on cash. And EquityBuild clients enjoy solid double digit earnings investing in real estate so a “negative” investment doesn’t apply to you. But the ECB action today is truly precedent-setting and its effects won’t be felt for several more months and while European reaction will be watched, others will be paying just as much attention to our own Federal Reserve, especially as the negative rate takes effect around the very same time the QEIII program comes to an end this fall.