Local Authorities Lose Millions of Ratepayers Money on Iceland Deposits

mrposhman

From the wiki article on investment

Investment or investing[1] is a term with several closely-related meanings in business management, finance and economics, related to saving or deferring consumption.
Investment is the choice by the individual to risk his savings with the hope of gain. Rather than store the good produced, or its money equivalent, the investor chooses to use that good either to create a durable consumer or producer good, or to lend the original saved good to another in exchange for either interest or a share of the profits.

Think that answers that then.

dunstonh

Think that answers that then.

Its always a risk using wiki. hence why I went argggh when doing so. As you can see that both bits quoted from wiki show that investment means taking a risk.

The term "Saving" generally means more then one thing. In the UK it means either putting money aside on a monthly basis, even into an investment contract (i.e. regular savings as in the action of putting money aside) or the use of deposit based instruments like fixed term deposits or savings accounts. Investment involves take a risk with your funds with the aim to make money.

There are a number of mis-used terms in financial services. Even by companies that should know better. Post office use the product name "Growth Bond" for their fixed term deposit. Despite it not being growth (growth is CGT chargeable but theirs is liable for income tax) and its not a bond, its a fixed term deposit. Although the use of bond with that product is quite widespread now. Post office also call their life assurance "insurance". Using the American use of the word and not the British. Investment bonds are not bonds either, they are single premium whole of life assurances but investment bond sounds better.

Boring subject but it beats the continued gloom and doom.

itsmickdundee

Anyone who had savings with Icesave or deposits with Landsbanki are called depositors and/or savers. These are the most "innocent" of all financial products.

That is, you expect minimal risk to your money and are using such services for safe, if underwhelming returns.

Investors, a word which I hear a lot of misinformed posters use on these boards, are an entirely different animal. These people are taking a RISK with their money, buying into things like shares or other assets like gold, which can obviously fluctuate wildly in price and can end up completely losing the investor all of their capital.

Thus, anyone who had a deposit or savings account with Landsbanki or Icesave are depositors and/or savers. They are NOT investors unless they held shares in Landsbanki.

Subsequently, should Landsbanki et al go bust, depositors and savers should not lose a penny, up to the limit of the compensation scheme.

Further, these County Councils and retail customers were not doing what many ill-educated and confused posters keep saying: "investing in an offshore account". This statement is wrong twice over.

First, they were not investing. They were depositing or saving. And second, the bank was not offshore, unless cities in England where Landsbanki had a presence are now considered "offshore". If a bank is on this Isle, it is NOT offshore and is therefore under the rule of the FSA and the Banking Code, regardless of which country owns the bank.

If it was shareholders investing in banks which fold, then yes, they should lose their money. It's the risk you take.

If you are depositing or saving money in a bank geographically located in the UK which goes bust, you should be compensated as you are not risking your money. You are entrusting the bank to look after it (a statement which rings a bit hollow these days...) - you are not risking it by investing. If it is offshore - and for those buffoons out there, that means not located on the British Isles - then you should not, and will not, be compensated. And too bad that it must use taxpayer money. It's a catch 22. Either we don't pay out and it's civil war on the streets. Or we pay out, lose more money, enter a recession and start a slow recovery.

You could say: "Yes, but why didn't everyone pull their money out of the Icelandic banks?". Well, I can assure you that if even a small fraction of UK customers had started doing this, the Icelandic banks would have folded anyway and then everyone would still be in the same situation. So you really would have had to have know about this a long time ago, especially if you had a lot of money saved/deposited.

So let's stop the confusion. And let's stop being stupid. It's unfair, yes. But we have no alternative. Do you not realise the dire consequences of not chopping off one of your balls right now? It must be done whether you like it or not! It's a seriously bitter pill to swallow, but it's also a short (or medium) term loss, for long term gain across the entire banking system. Otherwise we really are back to the dark ages.

Wake up.

oldwiring

Do you not realise the dire consequences of not chopping off one of your balls right now? It must be done whether you like it or not! It's a seriously bitter pill to swallow

:eek::eek::rotfl::rotfl: