Savers you've never had it so good?

barbarella

Help-anyone any advice??
I was recently made redundant but came off quite well. I paid off my First Direct Current Account Mortgage but left the facility open. My recent statement showed an interest rate of 2.5% now dropped further to 2%.

I had also previously opened a 1 year fixed rate savings account with Halifax at 6.5%

Sooo- I borrowed £40000 back from my Mortgage account and put it in the Halifax.

The monthly interest will be about £85 and when the Fixed rate account finishes in 6 months time, I will have about £550 profit.

That all makes sense to me but have I overlooked something???
It seems too good to be true.

Reaper

Sounds great barbarella, provided your savings account allows extra deposits (many fixed rates don't) and pays that amount on the full amount (instead of, say, the first £2000).

If so you've got a winner. I've said before any bank that offers a fixed interest rate and allows further deposits in a falling market needs to fire everybody who came up with the idea - but as a consumer I grabbed one when Egg for foolish enough to do it.

unhealthyman

I don't really understand how it works, but the calculator tells me that my personal inflation is at 6%.

Meh... Why bother?

baby_boomer

A large portion of serious savers are pensioners whose relevant inflation index is the CPI at 3% not the RPI at 0%.

This is the flaw in Martin's argument.

When he get's older, he'll understand. Or maybe he'll just be on a beach in the Bahamas!

lukekelly_2

Martin explicitly discusses in his article how some people's personal inflation will be much higher and thus they will be doing badly at present.

Any argument using an average value like a measure of inflation -- and it's hard to discuss facts and figures relating to the economy without doing so -- is of course going to apply more to some people than others. That's the nature of an average. The only flaw is in people's assumptions that if they don't match the average then either the argument or the average is wrong.

baby_boomer

If he really understood he wouldn't have included the phrase "you've never had it so good" in the Original Post. It might be good (provocative) journalism but it is insensitive, however much he covers himself in the small print.

lukekelly_2

It's not `small print', the title is conditional ("If inflation's at 0.1% you've never had it so GOOD!") and the need to consider people's individual inflation rates is the subject of the second paragraph. That's not exactly hidden away.

If we restrict ourselves to headlines that apply to absolutely everyone then we'd have blank newspapers.

harryhound

Lokolo wrote: »

As a student I only buy basic things such as food, pay for bills etc. which means my actual inflation is around 5%.... I am losing out

"To he who hath shall be given".

The reality of the methods being used to "fight" the recession, in horribly indebted UK Plc., is devaluation of the currency. This automatically increases the cost of all necessities (food & heat) as these are priced in Euro and Dollars.
The other technique, "easing" the money supply MAY produce galloping inflation if it works.

The folly was letting the banking and shadow banking create excessive amounts of money - much of which has now gone to money heaven, having been gambled and lent to people who "can't pay - won't pay".

The sensible move is to realise that putting foolish families onto the streets will solve nothing.

The reality is that the immediate result is to take from the prudent poor - be they pensioners or students.

The long term reality may be the impoverishment of the old and current trainees, as the rest of the world refuses to extend any more credit to us (The balance of payments deficit is already in the region of 400 GBP per man. woman, child, student, pensioner & student per month.) and these people struggle to meet the payments on overseas debt.

Just how long do we thing we can go on living off the back's of Chinese peasants?

harryhound

Nomad25 wrote: »

ok I've read all the extremely logicial explanations, I am in the older, careful, worrying about long term drains on our savings and not very financially astute group.

HOWEVER, I would raise few points:

1] That personal inflation thing is a bit too complicated for me to access.

2] The items on my monthly DD list [e.g. insurances, gym membership, BT, electricity] have all/or are going up by 20 - 60% but do not get included in CPI or RPI.



3] I should be looking to spend my money on big items [like cars, furniture, etc.] which I may need [but do not] in the future, because it's more for your money today?

4] As previous posters have said this really is a mindset thing, I have to get my head around this [still having great difficulty] my 'cautious saver' mentality and become a 'clairvoyant savvy spender'.

5] If I do this by digging into my capital, who is going to support me when it's all gone - the state will keep me? Oh right, that's something to look forward to and no doubt it'll pay for a really comfortable lifestyle.

And, I have to persuade my OH that spending our savings is potentially a good thing! Don't think this is going to happen.

If you can spend your money on something real and lasting that will save you some money in the longer term; then this is probably a good time to do it.
I'm thinking of something like having your house insulated or replacing the 1970's central heating system that must be on its last legs by now.

I agree with you things are going to get tougher a nastier as we have all been living beyond our means long before the credit crunch brought the party to an end.
Expect massive tax increases immediately the next election is out of the way.
Might it be an idea to do a deal with your children, if you can trust them and down size to something smaller in a lower tax band?

oldagetraveller

There are two commas missing and a superfluous question mark in the thread title as follows.
Savers, you've never had it, so good.