Savers you've never had it so good?

chardir

What doesn't seem to have been mentioned is that the inflation figure represents inflation over the last 12 months, whereas the savings rate represents the interest now. To get your real terms profit/loss you need to compare your average interest rate over the last 12 months, not just the current figure.

gozomark

chardir wrote: »

What doesn't seem to have been mentioned is that the inflation figure represents inflation over the last 12 months, whereas the savings rate represents the interest now. To get your real terms profit/loss you need to compare your average interest rate over the last 12 months, not just the current figure.

its been mentioned once or twice - this is why need to compare fixed rates on offer now with inflation expected in the future, not historic inflation, which is what Martin has done in his example

pilsdon

A couple of observations does anyone know if the rpi mortgage interest weightings have been adjusted to take account of caps and collars rather than rate movements.
Secondly this is relative about rate comparisons and it does not follow in cash flow terms .Try the numbers if all expenditure is funded by savings income .

gozomark

pilsdon wrote: »

.Try the numbers if all expenditure is funded by savings income .

which is exactly the issue we are trying to point out - thats what many people do, and they shouldn't

gozomark

pilsdon wrote: »

A couple of observations does anyone know if the rpi mortgage interest weightings have been adjusted to take account of caps and collars rather than rate movements.
.

RPI uses -Mortgage Interest - Average interest payments (estimated/modelled) - ie actual payments, so takes into account both actual interest rates paid, and price paid for property. Means should take account of caps and collars

Masomnia

sam2222 wrote: »

Does Marin Lewis want to apologies to those who lost thousands after he encouraging the members of this site to invest in the Icelandic banks last year due to the rates of high interest on their savings accounts?

As a self confessed ‘financial expert’ he seems as caught of guard as the rest of the bankers he is quick to criticise.

If something seems to good to be true...

Um, no one lost any money. Perhaps get your facts right before posting next time?

skyepark

i cant see that graph after i've put all my numbers in, I still don't really know what it means for me what should i spend my savings on?

gozomark

skyepark wrote: »

i cant see that graph after i've put all my numbers in, I still don't really know what it means for me what should i spend my savings on?

you need a graph to tell you what to spend your money on ?
:beer:

pilsdon

gozomark wrote: »

which is exactly the issue we are trying to point out - thats what many people do, and they shouldn't

Lets try ,I have expenditure £40 funded by capital of £1000 which last year earned 4%
net .This year I have expenditure £39.20 and income of £12 so I have to spend £27.2 from capital leaving £972.8 .Therefore I am worse off by probably 0 .7% and given that inflation is the norm I run a bigger risk.I haven't run the numbers using mid point positions . I suspect this is negative inflation not deflation cause by abnormal de-leveraging .At a point of change you are wiser to make short term adjustments to your expenditure rather than your longer term capital and base on your own experience not a sampled average.

gozomark

sorry, but you are wrong, because you are looking at capital in nominal terms - you are falling into the very trap we are warning people about

last year - you preserved your nominal capital at 1,000 but due to inflation its purchasing power was reduced by say 4%. You didn't preserve your real capital last year. What inflation is in the future is irrelevant