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Will The Banks Offer Decent ISA Deals Come April 2009
Comments
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I'm not sure what you're asking.
Why aren't banks doing the same thing as what? Investment banks do exist if that's what you're asking. How much do you think they make and why should they give you a third of it?
Or are you asking about buying corporate bonds issued by banks?
Savers usually want security of capital. That's not guaranteed with corporate bond - you have to assume an investment risk and the value of the bond will fluctuate on the secondary market. The income is more reliable though because long-term fixed-rate coupons exist.
What I'm saying is that capital fluctuations should be less of a concern to those seeking income.
No, the point I was making was that I'm sure the banks don't have my cash stored in a little red box somewhere with my name on it. They must be using it to make money. If they are using my money in the lucrative types of investment mentioned, why are they paying such low rates of interest back to me?
On the security side of things. Basically higher risk = higher rewards. How much do people want to gamble with their life savings? I don't fully understand why the big corporates want to pay so much for my cash, unless they are considered a bit risky.0 -
No, the point I was making was that I'm sure the banks don't have my cash stored in a little red box somewhere with my name on it. They must be using it to make money. If they are using my money in the lucrative types of investment mentioned, why are they paying such low rates of interest back to me?
The banks have already lost billions betting on subprime derivatives and dodgy loans. You had better rates when they thought they were engaged in lucrative activities.
At this point in the cycle, retails banks are busy rebuilding their balance sheets; they have to have a certain amount of cash on hand in proportion to their debt. With the government bail-outs some are having to pay 12% on preference shares to the taxpayer. With these extra overheads, they have to cut costs elsewhere and will also be winding down their loan/mortgage books.On the security side of things. Basically higher risk = higher rewards. How much do people want to gamble with their life savings? I don't fully understand why the big corporates want to pay so much for my cash, unless they are considered a bit risky.
Tell me where you can get a loan anywhere near base rate today. Are you so risky?
Many of these bonds will have been issued when rates were higher. With the credit crunch and subprime crisis, institutions have been selling off a wide variety of assets (including bonds and equities) to raise cash and thus depressing their value on the secondary market.
If you really think a diversified portfolio of bond funds and equity income funds is gambling your life savings then that's a naive attitude. A worst you're having to tolerate some fluctuations of the portfolio's value in exchange for a more stable income.0 -
This thread is on the ISA's board and primarily concerns interest rates not other forms of investment.
ISAs can hold other form of investments. Not just cash.
The thread also isn't about generating an income from cash (merely getting a decent interest rate). However some people are using it as an opportunity to discuss income.In any case I've been there before, got badly burnt and will never go there again.
Do please elaborate.0 -
ISAs can hold other form of investments. Not just cash.
The thread also isn't about generating an income from cash (merely getting a decent interest rate). However some people are using it as an opportunity to discuss income.
Do please elaborate.
If you go back to the OP it is pretty clear that it, and subsequent posts are referring to Cash Isa interest rates.
My original post was simply adding to Doomcow's posted views, had some people not intervened and changed the direction of the posts to inflation and income we would not be having this discussion (rightly or wrongly).
And as regards my personal experience with other investments, I am afraid that will remain private to me.
One last thing I would like to say is that, when people ask a question they are generally very grateful for any answers and advice received, however If they don't ask a question why give an answer or suggestion they never asked for in the first place.0 -
My original post was simply adding to Doomcow's posted views.
Can't see what it adds. Cash savings shouldn't be used as primary vehicle for generating income.had some people not intervened and changed the direction of the posts to inflation and income we would not be having this discussion (rightly or wrongly).
Those who put low interest rates in the context of inflation are right to do so. It's the real rate (i.e. interest rate - inflation rate) that matters in terms of preserving the value of one's capital. When you spend the interest the value of your capital goes down in real terms.And as regards my personal experience with other investments, I am afraid that will remain private to me.
Fine. Please don't let your mistakes get in the way of others making legitimate investments decisions.One last thing I would like to say is that, when people ask a question they are generally very grateful for any answers and advice received, however If they don't ask a question why give an answer or suggestion they never asked for in the first place.I don't disagree with most of your sentiments; but you are ignoring those of us who rely on income from our savings to supplement pensions, and whom are suffering huge drops in the amount we have to live on since rates nose dived.
So this poor soul who feels ignored and is suffering huge drops of income is posting for what reason?
Are they just here for a moan or do they want practical suggestions? Are they just going to carry on suffering or are they going to take action on their situation?0 -
If they are using my money in the lucrative types of investment mentioned, why are they paying such low rates of interest back to me?
Why should the Banks pass the profits of their risk taking to you, when all you do is put your money in a no-risk savings account ??
They will pay whatever rate of interest they think they can get away with.
As long as enough people put their money in the Banks then they will continue paying these rates.'In nature, there are neither rewards nor punishments - there are Consequences.'0 -
Jon3001; in case you did not understand this the first time, i'll try again!One last thing I would like to say is that, when people ask a question they are generally very grateful for any answers and advice received, however If they don't ask a question why give an answer or suggestion they never asked for in the first place.
Investment advice for instance?0 -
Will The Banks Offer Decent ISA Deals Come April 2009
I think the problem was with the word 'decent', it opened up a can of worms.0 -
Indeed.
So to answer the original question's title, YES, the banks will offer decent deals. But "decent" is something like BBR+1% i.e. 2.5% at the moment and possibly less by the time April comes.
The fantasy that banks/building societies can keep paying savings rates vastly more than BBR+1%, whilst charging lots of their mortgage borrowers lifetime rates of around BBR+1% (or in some cases considerably less). is precisely that - a fantasy.0 -
Jon3001; in case you did not understand this the first time, i'll try again!
Investment advice for instance?
As an instance of what? No advice was given - I used the imperative tense.
People who perpetuate that one should rely on savings as a source of income are giving some of the poorest investment advice there is.:mad:0
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