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MSE News: How can savers beat 19-year high inflation?
Former_MSE_Guy
Posts: 1,650 Forumite
This is the discussion thread for the following MSE News Story:
"Inflation is at a 19-year high meaning virtually every savings account would fail to keep pace with the cost of living were prices to continue rising at this rate ..."
"Inflation is at a 19-year high meaning virtually every savings account would fail to keep pace with the cost of living were prices to continue rising at this rate ..."
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Comments
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MSE Dan: this is the sort of correction required to remove ambiguity.
Inflation Beating Guarantee
RPI + 1% tax free (previously 6.3%). Government-run savings organisation, NS&I, has 3 and 5 year issues of Index Linked Savings that pay 1% more than inflation, the rate at which prices increase. It uses the higher measure, Retail Prices Index (RPI) inflation, currently at 5.3%, meaning it paid 6.3% overall this month. Although future RPI is unknown, you are guaranteed to receive this future RPI + 1% tax free in 12 months time. The max. deposit allowed is £15,000 per issue.
Note: 6.3% should now read 6.1% (date: June 19th)
JamesU0 -
Given that my mortgage, along with that of many other 'older' borrowers is 1.5% and inflation is at 5.3% I wonder how safe the viability of the banks is. The value of my loan is therefore going down in real terms, just by existing. I'm considering using some of the spare headroom from the flexible element of the mortgage to buy some of these certificates. The capital is guaranteed and the 1% minimum gain means that I could only loose a small amount of interest if it all goes wrong.0
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Is inflation at a 19 year high? What does this mean?Awaiting a new sig0
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3 and 5 yr accounts are all very well, but the bulk of my savings are ring fenced as a house deposit and we intend to buy next year. Any ideas? (ISA allowance used!)£2019 in 2019 #44 - 864.06/20190
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Inflation as measured by the Retail Prices Index has not been over 5% since 1991, so yes, it is at a 19-year high.Is inflation at a 19 year high? What does this mean?0 -
Inflation as measured by the Retail Prices Index has not been over 5% since 1991, so yes, it is at a 19-year high.
It is important to note that this on an annual basis, ie the change over the last year. The RPI has been jumping about due to very low interest rates, quantitative easing, the VAT reduction and subsequent restoration amongst other things.
Back when inflation was over 5% in 1991, the increase in the price index was nearly 16% looking back over the previous two years, ie, there was a sustained period of inflation at those sort of inflation rates. That might happen now of course, but it hasn't yet.
This time around the change in the index is an increase of under 4% over the previous two years and up 8.4% over the last 3 years. So once you take account of the period of deflation and examine a longer period the picture changes significantly.0 -
Kyser_Soze wrote: »Given that my mortgage, along with that of many other 'older' borrowers is 1.5% and inflation is at 5.3% I wonder how safe the viability of the banks is. The value of my loan is therefore going down in real terms, just by existing. I'm considering using some of the spare headroom from the flexible element of the mortgage to buy some of these certificates. The capital is guaranteed and the 1% minimum gain means that I could only loose a small amount of interest if it all goes wrong.
You are assuming that there is no capital loss in your property.0
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