Savers you've never had it so good?

beingjdc

gozomark wrote: »

OK lets just look at CPI

inflation last 12 months = 3% - interest earnt last 12 months 5-6%
inflation next 12 months = 1% - interest on 1 year fixed rate 3-3.5%

you need to compare like for like - comparing historic inflation with prospective returns is frankly idiotic

That's still a worse real return after tax now than a year ago, but how do you know CPI inflation is going to be 1% over the next 12 months? I suspect it will be substantially higher.

harryhound

Fred_Bear wrote: »

When do you all think was the best time for savers in the past 35 years?

.

Mid 70's were not bad.
You had to be mad to save on top of the mortgage in the early 70's as inflation was above interest rates BUT when the bubble burst and you needed a decent deposit and you had the previous 5 year of increases, even if they had fallen back 10%.
You could make the next rung on the ladder by buying from a distressed seller.
"If you can put that much of your own money in, then I'm not really bothered what the survey says" as he made a 200 GBP "retention" on a 16K house.

[Deleted User]

council tax is going up 4.9% for us. Water will be up 4.3% in april. Food is ever rising

as an oap I am having to run to stand still

Fred_Bear_2

kittie wrote: »

council tax is going up 4.9% for us. Water will be up 4.3% in april. Food is ever rising

as an oap I am having to run to stand still

You have my sympathy Kittie, your council tax and water rates are going up more than the average. However the retirement pension increase of 5.0% this year should help. Is it possible to change to a water meter? My water charges went down 28% when I changed and that's for a family of 4. The savings could be more if your household is smaller.

uih039

gozomark wrote: »

OK lets just look at CPI

inflation last 12 months = 3% - interest earnt last 12 months 5-6%
inflation next 12 months = 1% - interest on 1 year fixed rate 3-3.5%

you need to compare like for like - comparing historic inflation with prospective returns is frankly idiotic

I knew you wouldn't be able to stay away for long

uih039

gozomark wrote: »

OK lets just look at CPI

inflation last 12 months = 3% - interest earnt last 12 months 5-6%
inflation next 12 months = 1% - interest on 1 year fixed rate 3-3.5%

you need to compare like for like - comparing historic inflation with prospective returns is frankly idiotic

You took the words out of my mouth - thanks. Saves me replying to beingjdc.

As for beingjdc's other question, CPI prediction of 1% is reasonable although none of us can be ceratin. I expect CPI, RPI and interest rates to rise in mid-2010.

In the meantime, a little light reading for the doubters:

http://www.telegraph.co.uk/finance/personalfinance/comment/iancowie/4679385/Savers-the-winners-as-real-returns-rise.html

uih039

Fred_Bear wrote: »

When do you all think was the best time for savers in the past 20 years?

Extract from this page:

http://www.telegraph.co.uk/finance/personalfinance/comment/iancowie/4679385/Savers-the-winners-as-real-returns-rise.html

Richard Brown, an economist at HSBC said: “With interest rates in Britain at the lowest rate they have ever been, savers may think the real return on their savings is also at an all-time low. In fact, the lowest real return was in 1975 when inflation was raging and the real rate of return fell to minus 14.1pc.” By contrast, HSBC calculates that the real return today is 2.2pc, after taking the average for bank and building societies’ savings rates minus RPI. That’s not as good as the 3.4pc annual rate of increase in the purchasing power of savings seen in 2001 - the peak so far this decade - but a big improvement on the microscopic 0.06pc registered in 2006.

gozomark

almost a very good article - they let themselves down by comparing current interest rates with historic inflation - all they had to do was lag one series by a year