mum wants cash under her bed !!!

JimmyTheWig

Oh, that's such a difficult one. I can totally imagine that sort of level of mistrust of the banking system. She's at a point where she really can't afford to lose it - she doesn't really have much of a working life left to replace it.

But banks are _so_ safe (even the slightly precarious ones) that it is not worth losing £4000 over.

Is there anyone whose judgement she trusts who could convince her? A sibling, perhaps, or an old friend?


Edit: Just seen it's an investment rather than a savings account. Ooh, that's a different story. Tough call.

lilly-rose_2

i am going to print these comments out later and show her maybe this will work

a great big thank you

cheerfulcat

lilly-rose, have a look at the FSCS scheme here; that might put her mind at rest.

EdInvestor

I see there's a 1.75%AMC on that product.Disgraceful.

GeorgeHowell

It's easy to see why some people are thinking this way. Problems of high impact though low probability can lead to paranoia. For many people to lose a large chunk of their savings would be incredibly high impact -- from then on their existence would be a case of life, Jim, but not as we know it. Therefore, regardless of real probability, irrational fear can lead to irrational decisions like foregoing large amounts on interest in order to withdraw, or, even more irrationally, keeping large amounts of cash under the bed.

The way to counter the fear and persuade otherwise is to concentrate on the probability angle, not the impact. If people started losing some or all of the first £35,000 of their deposits in British based banks or building societies then we would be in the throes of total economic collapse. the biggest concerns would not be about a few thousand under the bed but where the next meal is coming from, or whether we will be able to avoid the effects of the riots and looting that are taking place on the streets of every town in the country. Unless anyone thinks that this is a likely outcome in the foreseeable future then best to leave money where it will earn some interest, and stick rigidly to the £35,000 limit with British based institutions, or if you're ultra cautious with NS&I and Northern Rock.

Guaranteed investment plans are a grey area with even the FSCS apparently unclear to what extent they protect them. Now that Halifax is to be part of Lloyds TSB the likelihood of it failing in the near term must be low, and would probably only be precipitated by the sort of total collapse described above. For the very nervous one option would be to cash in half of it to safer havens, exchanging the paper loss for some peace of mind. Also is there any mileage in a misselling claim here, as I'm not sure that an investor with that attitude to risk should be in that kind of arena in the first place ?

dunstonh

EdInvestor wrote: »

I see there's a 1.75%AMC on that product.Disgraceful.

No surprise though. The charge is largely ignored by consumers who are encouraged by Halifax sales reps who promote the no initial charge on funds. Halifax use the higher AMC to make it up. A bit like buy now pay later.

Also is there any mileage in a misselling claim here, as I'm not sure that an investor with that attitude to risk should be in that kind of arena in the first place ?

GEBs are a risk based product, even with their capital security. They are typically shown in the cautious or medium risk category. So, the risk of the individual should be considered when marketing a product like that.

isofa

Halifax / HBOS are not yet part of LTSB - it's neither signed nor sealed, but highly likely...

Biggles

That's all very well, but what would she do if her bed were nationalised?