Interest rate will rise!

musehead

Pobby wrote: »

I know I nearly panicked when the market crashed. I wonder how many with s and s investments rushed to the door. Some on here were posting the the market would drop a lot further. So glad, for once, I didn`t let panic get the better of me.

I made my first sizeable investment to S&S around October 2007 just before the market crashed. Almost freaked out but decided to leave it in there. My original plan was to add the same amount of capital each year in order to rebalance the portfolio, but due to my loss of confidence I only rebalanced in 2008 without adding any more capital while the market was down.

Lesson learned, if i'd stuck to my guns and put more capital in while the market was down i'd have far greater profits today. So from now on i'll be adding capital to rebalance whatever the market is doing.

Rupert_Bear

Hungerdunger wrote: »

In that case don't complain about poor variable rates. You made your choice and have to live with the consequences.

By the way apologies to everyone for clicking the "Thanks" button on the previous post - it was a complete accident.

If you have thanked someone in error then just remove it. Their is a button by the post. I thanked your post in error and then relised I did not want to and allowed me to remove it.

meunier

Can someone please explain something to me - and I do feel a complete idiot in these matters --- People have been saying that banks will need more money in the future and that they do not have the same number of options they may once have had to quickly raise such due to the current preference for regulatory dominance. If that IS the case then surely they (e.g., the banks) are going to NEED ever-more numbers of savers ... and therefore, I should think, they will be FORCED to raise interest rates. (Or am I simply being simplistic???) As someone who lives off a spread from the interest of a range of shorter/longer range fixed term deposits (hard won) I would be most sincerely grateful for your kind advice.

opinions4u

meunier wrote: »

they (e.g., the banks) are going to NEED ever-more numbers of savers ... and therefore, I should think, they will be FORCED to raise interest rates

While the banks would like there to be more savers, where exactly are they going to come from? Where is their money going to come from?

If a bank launches a new best buy "Super Duper Reward Saver Account" paying 4% for easy access it will bring in the funds. These funds will be withdrawn from another provider though. It won't increase the level of savings across the whole financial sector.

So such an act simply reduces the profitability of the business offering the account without solving the wider funding issues of the industry.

amcluesent

The incoming government will likely walk a tightrope between losing AAA and snuffing out the recovery with interest rate rises. Given input inflation in manufacturing is ~7%, interest rates should be more like 4% - however, it looks like they are going for a 'soft default' and running RPI 3-4% ahead of base rate for a few years to erode HMG debts. QE will be quietly forgotten about, so that's £250B in the system...

Anyone can see that the banks are now riding a wave of profits, borrowing at 0.1% and lending at 5%, all so that the Northern Crock, Lloyds and HBOS can be flogged off ASAP by the new government.

cloud_dog

meunier wrote: »

Can someone please explain something to me - and I do feel a complete idiot in these matters --- People have been saying that banks will need more money in the future and that they do not have the same number of options they may once have had to quickly raise such due to the current preference for regulatory dominance. If that IS the case then surely they (e.g., the banks) are going to NEED ever-more numbers of savers ... and therefore, I should think, they will be FORCED to raise interest rates. (Or am I simply being simplistic???) As someone who lives off a spread from the interest of a range of shorter/longer range fixed term deposits (hard won) I would be most sincerely grateful for your kind advice.

You are correct, normally. But, currently, or up until recently, banks have been needing to re-balnace / re-capitalise their capital so as to ensure they are solvent against their debts and possibly increasing debt going forward (companies / people defaulting on loans etc).

The Governement need for the economy to be in a low interest rate environment to help stimulate and maintain ongoing recovery (still very much a tight balance). Low interest rates alone would not have achieved this (with the amount of debt/defaults out there and lack of easy credit for the banks) so they invoked Quantatitive Easing. This is basically where the Government distributed lots of cheap money to the banks. This helped the banks to reflate their balance sheet (making their debt / capital ratio more acceptable/reasonable) and the Government hoped that once this was achieved the banks would then start lending money, encouraging people to spend, buy houses etc, etc.

To asnwer your question..... The crisis was (is) so bad that finacial institutions could not afford to pay highre interest rates and with the amount of money they needed individual savers would never have deposited that sort of money. So, atm they are checking to make sure they have plugged the hole in the boat and are not really focussing on have they got enough life boats.

lisyloo

Craig12 wrote: »

Nope, sorry, I don't walk into the bank and pay myself from the drawer. Come back to reality.

Criag, the phrase referred to is "You pays your money you takes your choice".
Which means you choose the risk.
Everyone has choices except people who have put themselves in a situation where they have none.