Negative mortgage rates?

+ how much income will millennials have to save to retire by 65

Issue #12. 

Hope you’re having another financially successful week!  In this week’s edition of the Gist, we’ll discuss whether we will see negative mortgage rates in the US any time soon, and how much income will millennials have to save to retire, say, at age 65.

As a reminder, the Gist comes to your Inbox once a week and is not meant to be financial advice or a recommendation to purchase any product or security.  If any of this is useful to you, please invite your family and friends to join the community here

You can also ask us any finance or investment question privately by visiting  We will share the most insightful questions and answers with our Gist audience.  

So here are your questions for today’s edition: 

  1. I’ve heard there is a bank in Denmark that offers mortgages with a negative 0.5% interest rate. Are we likely to see this in the United States any time soon?

  2. Is it true that millennials will have to save 1/2 of their income to retire by 65?

  3. Can you tell me how to invest $14k I’m saving for retirement in my IRA?

Let’s give you the summary first.


  1. First of all, note that mortgage rates tend to be higher than bond yields. In Denmark, negative-yielding bonds are a reality. In the US, that's not the case. For us to see mortgages with negative interest rates in the US, something fundamentally wrong would have to happen with our economy.

  2. The major assumption here is that investment returns over the next few decades aren’t going to match the 10% historical returns for the US stock market. Many analysts are predicting lower growth rates (e.g., 3-5%) of the US stock market, which implies that millennials will have to save more to retire (or invest in markets offering higher returns). Whether that’s 50% or perhaps less varies by individual.

  3. If you know nothing about investing, check out our simple investing guide or Bogleheads’ lazy portfolios. Before investing your retirement moneys, assess your risk tolerance. Diversify by holding mutual funds or ETFs, not stocks. Keep it simple and cheap (avoid expensive funds).

Deep Dive

  1. Negative mortgage rates are a real thing. This basically means the lender pays the borrower, not the other way around. Jyske Bank in Denmark is offering a mortgage that pays the borrower. It's a fixed-rate mortgage with a nominal interest rate of minus 0.5%.

    Are we going to have negative mortgage rates in the US? Not likely, but possible. Throw in a few trade wars and a couple of downturns / recessions, negative mortgage rates might show up in the US.

  2. Vanguard economists predict that over the next 10 years, annual US stock market returns will likely average 3% to 5%. When you factor in inflation, which should be below 2%, the real rate of return is expected to be 1-3%. At this rate of growth, millennials will need to save more money for retirement.

    This doesn't account for the Social Security shortfall, which millennials are likely to experience as well.

    So what are the things you can do to increase your ability to retire by 65? Three things come to mind:

    • Earn and save more money;

    • Work longer. You can retire after 65;

    • Look for markets with higher returns--perhaps emerging markets stocks.

  3. Two options you should explore for your retirement savings are target-date funds and “lazy portfolios”. A “lazy portfolio” is a portfolio designed to do well in most market conditions, typically containing a small number of low-cost index funds. The term “lazy” is used because the investor can maintain the same money allocation for an extended period of time.

    A lazy portfolio will give you exposure to the major types of assets: domestic and international stocks, and bonds. It’s often used because of its simplicity.

    Check out our lazy ETF portfolio tool.

    And also view our lazy mutual fund portfolio tool.

That’s it for this edition.  What would you like to hear about in our next Gist?  Ask us a question here.

The AskFinny Team