controversial dig at savers

tradetime

No surprises there, corporate bond yields have risen to a point where given the poor yields on cash, treasuries, or gilts, they cannot really be ignored. As to the "who" I'm not sure that is particularly relevant, (although at the same time, I think I know what you mean) however either it will be the right time to get into the market or it won't. The action itself will help begin the recovery process making it cheaper for companies to finance.

john_s_2

tradetime wrote: »

As to the "who" I'm not sure that is particularly relevant, (although at the same time, I think I know what you mean)...

Indeed, I was looking at it from the point of view of the investors themselves, not from the point of view of the whole economy.

I speak as a "traditional" cash saver, who has no intention of moving his cash into anything else for the foreseeable future.

(That said, I'm now at the point, I think, where I have enough cash saved to start considering making investments - but that's a different subject entirely.)

tradetime

I speak as a "traditional" cash saver, who has no intention of moving his cash into anything else for the foreseeable future.

Traditionally I would say savers are reluctant to put their money anywhere else, and I personally would not go to any lengths to convince the majority otherwise, people have to learn the alternatives for themselves and become comfortable with it.

(That said, I'm now at the point, I think, where I have enough cash saved to start considering making investments - but that's a different subject entirely.)

The only advice I would offer there, is take your time and do your research carefully, I don't think there is any rush here.

john_s_2

tradetime wrote: »

The only advice I would offer there, is take your time and do your research carefully, I don't think there is any rush here.

Yup, thanks for that. Like I say, very early days, and I'm in no rush at all. I'm more likely to have done all those jobs the wife wants me to do before I make my first investment :-)

chodges84

oxenryd wrote: »

I have to disagree with the use of the word lucky. These people have saved, it's not just appeared in their bank/savings account. Lucky is when you win the lottery.

Youare correct. Saver aren't 'lucky' they are just savvy. Some people chose to live within their means and put something by. Others chose to go on a long haul holiday every year and a new plasma telly thanks to their credit card.

I'm in the first group and dislike bailing out people with a total lack of any kind of financial logic. If you've run up so much debt that you end up losing your home and going bankrupt, then so be it. That's the way it has always been.

newsaver2008

Well ...some savers are lucky because they happened to sell their houses at a good time so this is why they are sitting on a cash pile. I too cannot understand someone of 85 who is so miserly and clings onto a huge cash pile which she cannot take with her. On that subject I know of a lady of 86 who made a huge amount of money (I am talking of millions and millions) by laundering it and has now come to Turkey and is getting married to an old guy who has also been dabbling in that kind of thing. So you're never too old!!

EdInvestor

It is not necessary to buy an annuity (and lose your capital) if you want a guaranteed fixed income.

Just buy a gilt - or a selection of different gilts.A gilt is a Government bond, as safe as you can get. They are issued for a specific period , and on maturity the Govt will repay your capital.

Read all about gilts here:

http://www.dmo.gov.uk/index.aspx?page=Gilts/About_Gilts

Not so many years ago you could buy gilts at the Post Office so they can't have been too complicated for ordinary people to understand.

Cash is not suitable for people seeking income, as interest rates fluctuate too much and the capital is eaten away by inflation.

john_s_2

How does the income a gilt provides compare to an annuity? I'd assume an annuity would provide more? (To compensate the fact you're not getting your capital back.)

EdInvestor

john_s wrote: »

How does the income a gilt provides compare to an annuity? I'd assume an annuity would provide more? (To compensate the fact you're not getting your capital back.)

Yes.But if you are quite young there may not be much in it - gilt yields do not vary with age.

john_s_2

EdInvestor wrote: »

Yes.But if you are quite young there may not be much in it - gilt yields do not vary with age.

Cheers. Sorry, I was thinking of retired people (60 plus say). I don't know much about annuities - I hadn't even realised you can buy them when you're younger!

Out of interest, how come defined contribution pension schemes only let you buy an annuity with the lump sum? Or are there schemes that allow you to use the lump sum for other investments/purposes? Or have I misunderstood defined contribution schemes?