Savers you've never had it so good?

bristolleedsfan

http://www.thisismoney.co.uk/consumer/bills/article.html?in_article_id=476854&in_page_id=&ito=1565 :rolleyes: :rolleyes:

lukekelly_2

All I am saying is that people who have seen periods of high inflation are anxious to do the only things they can do to preserve their position for as long as possible, by manipulating the only handles available to them.

And I would not and have not disagreed with that. What I have disagreed with is the repeated assertion both here and in the media that spending capital is never prudent and that interest can always be freely spent without eroding net wealth. It's not people's desire to be prudent that I'm disagreeing with, it's widespread misunderstanding of what it means to be prudent. This leads to people turning their heating off to preserve their capital when inflation is low and spending interest they should be conserving if they want to maintain the value of their savings when inflation is high.

It's great that people want to be prudent. They should be helped to do so effectively.

mean_momma

KEVSART wrote: »

I personally think it's prime time for savers to actually SPEND their savings,since the earnings have dropped so low ...... only question is what to spend the money on : it will have to be something long-lasting and likely to appreciate (or not depreciate as quickly in other words)Regards

Something like......... property? ........savers are already joining the flight to property, according to the Times Bricks and Mortar.

gozomark

bristolleedsfan wrote: »

http://www.thisismoney.co.uk/consumer/bills/article.html?in_article_id=476854&in_page_id=&ito=1565 :rolleyes: :rolleyes:

water bills are included in the RPI and CPI basket - picking one item and showing its going to rise more than the average doesn't disprove the overall calculation

savetilibleed

mean_momma wrote: »

Reaper wrote: »

The crucial point you are still missing is inflation. It is no good keeping a fixed sum of capital to fund future residential care if inflation puts the price out of your reach. Nor is it worth leaving the capital intact if deflation makes it "cheaper" than you expected.
I've tried to explain the concept as clearly as possible (as has Martin) and I can't think of any further ways to get it across.. ..(quote)

Right, I guess that the safety net of savings for pensioners is now full of rather large holes. Next stop, benefits. Hope the state will be getting prepared for a glut of 'distressed ex savers' with all mod cons.

That's after their savings have gone in utility bills, council tax or WHY. The system of assessing whether you can qualify for benefits takes capital into account, not what you can (or do) earn on capital. If it did take what you can earn on capital into account then more could get benefits in these low interest times.

gozomark

savetilibleed wrote: »

mean_momma wrote: »

If it did take what you can earn on capital into account then more could get benefits in these low interest times.

not if it took into account real interest rates, and preservation of real capital

OsaMayor

None of Martin's comments works for my old 97 year old Dad. A working man all his life he managed to buy his old council house. We sold his house to finance his Care Home costs earlier last year and invested the money in 8 Fixed rate 1 year Bonds/accounts after trawling through the information on the Money Saving Expert site. It has worked so far and the interest plus his Goverment Pension and Attendance Allowance and Pension Credit have kept up with the full cost payments for the Care Home. However, as these Bonds/Accounts come to an end we will have to invest the capital again at lower rates and the interest will not cover the Care Home costs so we will have to deplete the capital. I am wondering whether I should re-invest in variable rate rather than fixed rate for the future as the rate might change and leave us behind if we go for a fix. Any comments?

mean_momma

savetilibleed wrote: »

That's after their savings have gone in utility bills, council tax or WHY. The system of assessing whether you can qualify for benefits takes capital into account, not what you can (or do) earn on capital. If it did take what you can earn on capital into account then more could get benefits in these low interest times.

Looks as though the message is indeed "Spend Spend Spend"

dc

Using the RPI alone for your mathematics, invalidates the thread title and is the only basis for your false argument that savers in general are better off.

In general they would be proved worse off had you used one of the many other higher indices .

Bullet/Foot.;)

gozomark

any comments ?

read the very first post, and you will see why Martin's comments do work for your Dad

I'm beginning to lose the will to live.........