Getting In Too Deep With Iceland?

Oblivion

It's a constantly changing scene, so I'm just interested in people's latest views on Icelandic savings and whether you think I'm about to get in too deep.

I already have £34k in an IceSave account and several other accounts with traditional British banks and building societies to spread the risk. The problem is that I'm struggling to find any British institutions, that I'm not already with, offering accounts with decent rate guarantees. So I find myself looking at Iceland again and the Kaupthing Edge High Interest Savings Account with it's excellent rate guarantee until 2012.

Anyone think I'm crazy to take a second plunge into Icelandic waters?

Dave.

freddysmith

You can get a 1 or 2yr fixed rate of 7% gross at Nationwide

Some other options on 3 year bonds at

http://www.moneyfacts.co.uk/savings/bestbuys/long-term-fixed-rate-bonds.aspx

Oblivion

freddysmith wrote: »

You can get a 1 or 2yr fixed rate of 7% gross at Nationwide

Some other options on 3 year bonds at

http://www.moneyfacts.co.uk/savings/bestbuys/long-term-fixed-rate-bonds.aspx

Hi freddy and thanks. Apologies, I probably should have included in my OP that, due to specific personal circumstances, I need all my money available as 'instant access' and so I'm not looking at fixed rate / fixed period terms. Even if I was, I have a feeling that bank rate may need to climb quite substantially in the next year or so, and those fixed rate terms may not look so good compared to a traditional instant access account with a good guarantee based on bank rate.

Dave.

planemad

Oblivion wrote: »

It's a constantly changing scene, so I'm just interested in people's latest views on Icelandic savings and whether you think I'm about to get in too deep.

I already have £34k in an IceSave account and several other accounts with traditional British banks and building societies to spread the risk. The problem is that I'm struggling to find any British institutions, that I'm not already with, offering accounts with decent rate guarantees. So I find myself looking at Iceland again and the Kaupthing Edge High Interest Savings Account with it's excellent rate guarantee until 2012.

Anyone think I'm crazy to take a second plunge into Icelandic waters?

Dave.

KE are a good institution and we are only hearing good things about them.
If you are still worried then just stick more cash into UK institutions, the Northern Rock fiasco has shown that the UK government will not allow a UK bank to default.

Failing the above stick loads in Northern Rock as currently they have unlimited protection.

Hope the above helps.

LongTermLurker

Oblivion wrote: »

It's a constantly changing scene, so I'm just interested in people's latest views on Icelandic savings and whether you think I'm about to get in too deep.

I already have £34k in an IceSave account and several other accounts with traditional British banks and building societies to spread the risk. The problem is that I'm struggling to find any British institutions, that I'm not already with, offering accounts with decent rate guarantees. So I find myself looking at Iceland again and the Kaupthing Edge High Interest Savings Account with it's excellent rate guarantee until 2012.

Anyone think I'm crazy to take a second plunge into Icelandic waters?

Dave.

I'm pretty bullish about KE and I don't believe everything I read; however, I wouldn't put all my money in an economy that does have its share of problems, as Iceland does indeed have. You say you have money with other non-Icelandic banks and are looking for somewhere to put extra new money - in that case, your eggs are covered (so to speak) and I would be happy to put more in.

In fact, KE give you more localised protection than Icesave because they are fully registered with FSCS so in the event they went under you wouldn't have to mess about going to Iceland (the country) for part of your compensation.

LongTermLurker

planemad wrote: »

KE are a good institution and we are only hearing good things about them.

Actually, I would say we're hearing only bad things about KE - they are the bank the press love to hate at the moment.

planemad wrote: »

If you are still worried then just stick more cash into UK institutions, the Northern Rock fiasco has shown that the UK government will not allow a UK bank to default.

They did it once, but a repeat would be hard to judge either way. Labour have taken a lot of flack about giving away tax-payers' money and although I have no firm thoughts either way on that one, I would say that the public should now wise-up and not expect another full bale out. Everyone now knows the risks and the £35k limit, so more fool anyone who has more than that with one institution and are banking on the government to bale them out.

planemad wrote: »

Failing the above stick loads in Northern Rock as currently they have unlimited protection.

Correct, but the important word is 'currently'.

planemad

Sorry to go slightly off topic but everyone is getting into panics about the protection offered.
What did everyone do last year when the protected buffer was lower.

Did everyone only have a few grand in dozens of account just to stay 100% protected?

If feel that if everyone just stops worrying and panicking as soon as the press click there finger all of the financial institutions should stay alive.

LongTermLurker

planemad wrote: »

Sorry to go slightly off topic but everyone is getting into panics about the protection offered.
What did everyone do last year when the protected buffer was lower.

Did everyone only have a few grand in dozens of account just to stay 100% protected?

If feel that if everyone just stops worrying and panicking as soon as the press click there finger all of the financial institutions should stay alive.

I think most people weren't fully aware of the limits, and that's why they had 1) put all their money in NR and 2) made a mad dash to withdraw it. I would hope that people are generally a bit more sensible now.

Spreading your money round isn't panicing (sp??) it's prudent investment strategy, used for cash deposits - no one (hopefully) would invest 100% of their money in BT shares, no matter how good they thought they were. Instead, they would build a portfolio. Likewise though, if you had £100k to invest, you wouldn't buy into 100 different companies - that would be equally crazy. Therefore, it makes sense to build a savings portfolio using the same techniques, spreading your risk and making as much use of the protection as you can be bothered with.

Most people with lots of money won't put it all into cash unless they're very risk averse, so £35k is actually quite a large amount and you wouldn't need more than 2 or 3 accounts to diversify on that basis.

Oblivion

planemad wrote: »

Sorry to go slightly off topic but everyone is getting into panics about the protection offered.
What did everyone do last year when the protected buffer was lower.

Did everyone only have a few grand in dozens of account just to stay 100% protected?

If feel that if everyone just stops worrying and panicking as soon as the press click there finger all of the financial institutions should stay alive.

I agree with the sentiment of that last statement, but the reality is that we are a media driven society nowadays, and it only takes some fool reporter to create a false scare and the world and his wife rush to get their savings out. Another run on a bank is but a sensationalist newspaper column away.

Dave.

planemad

Oblivion wrote: »

I agree with the sentiment of that last statement, but the reality is that we are a media driven society nowadays, and it only takes some fool reporter to create a false scare and the world and his wife rush to get their savings out. Another run on a bank is but a sensationalist newspaper column away.

Dave.

Totally Agree

fg22

LongTermLurker wrote: »

no one (hopefully) would invest 100% of their money in BT shares, no matter how good they thought they were. Instead, they would build a portfolio. Likewise though, if you had £100k to invest, you wouldn't buy into 100 different companies - that would be equally crazy.

Why is buying into 100 different companies crazy? It sounds like sensible diversification. If I had 100k I'd probably choose to invest in around 10 funds and therefore easily over 100 companies.