Millions of Americans — many retirees concerned about losing savings they need for current expenses — are turning to savings accounts and CDs to safely store their money. But, with interest rates around 1% or even lower, savers fall behind inflation — ultimately paying banks to store their money, rather than earning interest on the banks’ use of the funds.
Some investors are responding by getting more diligent and more creative in researching investments that can provide diversification — including other investments that are relatively secure and generate income. Others, though, are putting up with negative growth out of fear.
Some critics even say that the government is intentionally creating this situation to encourage more funds to flow into the stock market, potentially creating yet another bubble.
(For more analysis, see At Tiny Rates, Saving Money Costs Investors at the New York Times web site.)