Savers you've never had it so good?

Entertainer

I saw Martin mention this on a t.v show recently. He's basically talking about the need to think in terms of real interest rates (interest rates - inflation) when working out your returns or the cost of servicing your debts. It's a shame more people weren't talking about real interest rates during the recent house price boom instead of the myth that was put out by the pyramid sellers that mortgages were affordable because nominal interest rates were low. The funny thing is that real interest rates have been steady at around 3 percent for the last 25 years so (long term) home loans were no more affordable in the last few years than they were when rates were 10%+.

unitedwestand

gozomark wrote: »

um, borrowers are not doing well at all as in real terms they are paying very high rates - its the same illusion of looking at nominal not real rates - this applies to both borrowers and savers

Surely that can't be true. Its the glorious credit crunch, we've never been better off!

Bush & Blair should be made saints & the banking hierarchy should have bonuses tripled, just look at this amazing gift they've given us. :kisses:

gomeraman

Remember though that any wage increase (or pension increase) is likely to be linked to RPI - so you may not receive any. Savers lose almost every which way when this is factored in.

gozomark

gomeraman wrote: »

. Savers lose almost every which way when this is factored in.

apart from the one way which really matters

samy_2

unitedwestand wrote: »

Wow!

If you’re at risk of loosing your job or already have, or you’re an OAP with limited savings, or you’ve received no bonus, no salary increase or had working hours cut back & now your savings rate has been slashed….

….one thing you’ll no doubt be rushing out to do every night is fill one of Martins virtual baskets full of goods.

Go credit crunch!:j

you've hit the nail on the head, i wholeheartedly agree with you.. in these times of job uncertainty , frozen salaries, etc, etc are we really that reckless that we are going to start spending because there's no point our money sitting in the bank as there's next to no interest??? people! please! common sense!

:T

bobclive_2

what you have to remember is that 0.1% of nothing is exactly the same as 50% of nothing, don`t spend your savings, when the have gone they have gone.

gozomark

samy wrote: »

you've hit the nail on the head, i wholeheartedly agree with you.. in these times of job uncertainty , frozen salaries, etc, etc are we really that reckless that we are going to start spending because there's no point our money sitting in the bank as there's next to no interest??? people! please! common sense!

:T

umm, thats not the point of this thread at all

MiserlyMartin

gozomark wrote: »

council tax is a tax, and so is excluded from CPI and RPI......

It shouldn't be excluded. It is a cost of living as it is paid out of your already taxed income. Another fiddle from the government.

gozomark

OK. lets take someone with 100,000 in savings

scenario A - inflation 10%, interest rates 10% -how much can they spend and maintain their capital ?

scenarion B - inflation 0%, interest rates 2% -how much can they spend and maintain their capital ?

is a saver better off in A or B ?

those who agree with Martin will say
0,
2,000
and B.

I guess some of those who don't agree with Martin will say
10,000,
2,000
and A

gozomark

MiserlyMartin wrote: »

It shouldn't be excluded. It is a cost of living as it is paid out of your already taxed income. Another fiddle from the government.

my partial error - its included in RPI, but not in CPI