MSE News: No 'savings' accounts exist, they're all 'losings'

Former_MSE_Dan

bendix wrote: »

What possible motivation could there be to issue this, except PR? Can they not understand how some of our more gullible posters might look at it and decide to stop saving completely?

Hi bendix,

I find this middle section a bit strange - the whole second half of the story is listing the top picks and saying people should actively monitor rates and switch?

Sorry you don't agree with this article, but then that's the great thing about forums, lots of opinions

Dan

MoneySavingNovice

I did a depressing calculation - the best financial product which I currently has (after inflation) is my Mortgage - which due to the low rate is making me money. My offset savings (held in different institutions) are actually losing me money!

(I’m in the luck position to be able to pay-off my mortgage tomorrow, as I have more savings than Mortgage)

But what does about the world when you lose money on your savings and make money on you mortgage?

chardir

It seems to me that the comparison between savings rates and inflation is irrelevant. Ok, so your savings are slowly depreciating but what's the alternative? If you spend the money (on anything that's not an asset) then it depreciates instantly (i.e. you can no longer spend it). Or you could invest in stocks/property etc. which is risky and is affected by inflation in exactly the same way.

Mickygg

ScarletBea wrote: »

I don't notice any visible inflation for me though...

I noticed this in Tesco where many food items are rocketing.

What isn't taken into account in these headlines is that inflation affects you depending on what you spend. If you spend £20k a year but have £100k in savings then your savings will grow above inflation due to the amounts involved. 3% on £100k gives you £3k, whereas 5% on £20k spend gives you £1k, so savings have given you £2k above inflation. It's all relative to what you spend, earn and save.

I agree with the above that these headlines are pretty useless. What they should say is interest rates on accounts are low when compared to current rate inflation and leave it at that.

chardir

Mickygg wrote: »

What isn't taken into account in these headlines is that inflation affects you depending on what you spend. If you spend £20k a year but have £100k in savings then your savings will grow above inflation due to the amounts involved. 3% on £100k gives you £3k, whereas 5% on £20k spend gives you £1k, so savings have given you £2k above inflation. It's all relative to what you spend, earn and save.

It doesn't work like that. If you have 100k in savings and inflation is 5% then in a year's time you'll need 105k to buy exactly the same goods. If your savings have only increased to 103k then you're 2k worse off. How much you spend isn't a factor.

bendix

MSE_Dan wrote: »

Hi bendix,

I find this middle section a bit strange - the whole second half of the story is listing the top picks and saying people should actively monitor rates and switch?

Sorry you don't agree with this article, but then that's the great thing about forums, lots of opinions

Dan

Then you obviously don't read the posts on this forum very well Dan.

Just this morning there was a thread started by someone who said that as interest rates are so low, he's not bothering to save anymore. He /she wishes they had not saved before and instead wished they had p****d all their savings up a wall.

Such threads are not uncommon.

Your article plays into this populist nonsense completely. There are many unsophisticated investors and savers here who will see thrust of what you saying and decide that it's not worth being financially prudent - they might as well spend everything they save.

And that - frankly - is irresponsible on a site like this.

lisyloo

There are many unsophisticated investors and savers here who will see thrust of what you saying and decide that it's not worth being financially prudent - they might as well spend everything they save.

I don't agree with not being prudent.
But I can see a case for bringing forward purchases you CAN afford if prices in real terms are cheaper right now.

Personally I don't think there is a god given right to have above inflation risk free savings.
But people can still invest in other things even if unsophisticated.

Simon11

I agree, it’s the same when they talk about a price war between the Petrol stations again and again. There’s always competition between petrol stations. Once one petrol company does it, the others follow otherwise they lose business. They’re also looking to get a mention in the press to support their brand which MSE happily advertised.....:mad:

The quality of these recent news articles are similar standard to Daily Express

With regards to the news article, You are scaring potential savers, by saying its pointless as the inflation rate is higher. However this won't be the case in a few months (Hopefully), yet no mention of this.:cool:

Think Long term, not short term :j

Mickygg

chardir wrote: »

It doesn't work like that. If you have 100k in savings and inflation is 5% then in a year's time you'll need 105k to buy exactly the same goods. If your savings have only increased to 103k then you're 2k worse off. How much you spend isn't a factor.

The actual goods you buy and the amount of money you spend is actually a factor. The 5% RPI is an average of many items, whereas you are affected differently by what you buy and how much you spend.

For example house inflation is different to RPI. If I am saving for a new house, and spending all my wage money on food, this will be different to the value of my money when I compare it to spending my savings all on booze and my earnings on a pet tiger.

The 5% inflation headline rate is all relative to what you spend your money on and what you save for. It affects all people differently and isn't as clear cut as £100k savings with RPI at 5% and interest rate at 3% means you'll be worse off. I admit this will though of course be the case for many people.

Former_MSE_Dan

bendix wrote: »

Your article plays into this populist nonsense completely. There are many unsophisticated investors and savers here who will see thrust of what you saying and decide that it's not worth being financially prudent - they might as well spend everything they save.

And that - frankly - is irresponsible on a site like this.

I think we'll have to agree to disagree, the entire thrust of the article is how to improve the return on spare cash or savings. Paying off debts makes financial sense as explained (and we do warn about keeping an emergency fund).

It may calm your fears about to hear that the savings guides on the main site are among the most read articles week-in and week-out, and as such we keep them up to date daily where. We are very much in favour of people getting the best rates - and this question of inflation eating into savings is one we are asked all the time, hence the news story

Simon11 wrote: »

With regards to the news article, You are scaring potential savers, by saying its pointless as the inflation rate is higher.

We expressly do not say this in the news piece, in fact we say:

"After that, beating current inflation without investment risk ain't going to happen. Yet it's still important to diminish its ravages by getting the best rate possible"

- actually encouraging saving and getting the best rates now.

Dan