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MSE News: No 'savings' accounts exist, they're all 'losings'
Comments
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It remains to be seen whether any current savings account will beat inflation. It may turn out that some of the fixed term bonds do beat inflation over their life. There is no point in comparing inflation over the past year with interest rates for the coming years.
*You could use variable rate accounts but for practical reasons fixed rates make the comparisons easiest......under construction.... COVID is a [discontinued] scam0 -
Anyone using savings accounts for provision of income has always suffered inflation risk. It doesnt matter what interest rates are or the inflation rate.
So, when you see references to pensioners being worse off etc then they are only worse off because they have made that choice to use an inefficient asset class for provision of income. Often on the basis that they dont want investment risk but dont realise that they are replacing it with shortfall risk and inflation risk.Or you could invest in stocks/property etc. which is risky and is affected by inflation in exactly the same way.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0 -
Sadly none of my investments has made me any money. My timing was unfortunate but then I didn't plan to inherit when I did. I decided to risk some of my inheritance, and am leaving my S & S ISAs where they are, but have pulled other investments back into savings as I am not happy to take any further risk of losing as much as 25%. I would rather lose to inflation than risk my capital again.0
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Newly_retired wrote: »Sadly none of my investments has made me any money. My timing was unfortunate but then I didn't plan to inherit when I did. I decided to risk some of my inheritance, and am leaving my S & S ISAs where they are, but have pulled other investments back into savings as I am not happy to take any further risk of losing as much as 25%. I would rather lose to inflation than risk my capital again.
Yeah, great strategy. Pull out of your investments after they've lost 25%. I like your thinking.
You could go further and stay out and watch markets recover and improve, and then buy when they get really high too.
What do you think?0 -
Not very encouraging nor motivating is itAn average day in my life:hello: :eek::mad: :coffee::coffee::coffee::T
:rotfl: :rotfl:
:eek::mad: :beer:
I am no expert in property but have lived in many types of homes, in many locations and can only talk from experience.0 -
MoneySavingNovice wrote: »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 [that say] about the world when you lose money on your savings and make money on you mortgage?
Welcome back to the 1970's.
I inherited 25% of a house and serious debts at the end of the 1960's, I was 21. My mother a non working woman in her 50's had to go out and get a job and my school girl sister ended up living off a university student grant and casual work, after a year at "Tech." learning short hand and typing.
Fortunately these debts (about 50K in today's money) could be stalled inside the estate, secured by the house and I personally could go out and make my way in the world.
The horrible 1970's that followed the "never had it so good" lie of the 1960's - the 1970's decade, when Britain wrote off debt, stored up since World War Two.
The country had not only been physically seriously damaged by the war, it had lost its hegemony over its empire (on which "the sun never set") and had mortgaged everything to fight the war.
At last the Americans, enriched by the war solving their crisis of capitalism economy, stumbled:
Their deficit financing, of the Vietnam war and arms race with the Soviets, devalued their dollars and our debts.
A "socialist" government, followed by a "conservative" government that lost its nerve, was able to gear up this devaluation and indulge in "Taxation by Inflation".
It saw my personal (mortgage) and family debts being written off at as much as 18% per year, as all those with savings/investments denominated in fiat currency paid this "wealth" tax - Another generation of pensioners ended their days in "reduced circumstances".
There followed a brief lucky respite created by North Sea oil, which allowed the Thatcher administration to pay off the last of the WW2 debts, talk about paying off all the national debt and restructure the economy on capitalist principles.
During this period the Soviet empire fell apart, as its centralised bureaucracy found it was totally inept at playing the state capitalism game. Whether the resulting "commonwealth" is better off with its gangster economy, is a moot point.
Do how has Britain Plc reacted to this new world order - well its politicians have bought votes by stoking up a 20 year party that appeared to lift living standards to N.American standards; all be it in a densely populated island.
Society has diverged into:
Those with money and wealth.
Those with money as a result of high incomes.
Those with wealth but finding it difficult to sell their limited skills in a globalized market.
v
Those with money but geared up and servicing personal debts.
Those with little money as they try to sell their limited skills.
Those who have given up the struggle, who legally cannot sell their
skills at a globalized market rate and are living on state benefits.
So what is my point about saving at negative real interest rates:
1. Every man woman and child in this country is carrying a mortgage taken out on your behalf by the government. Figures vary as there is a lot of off balance sheet financing but let's call it 20 something thousand per head.
2. During the period I have reviewed the world population had more than doubled and it is looking like we are running up against "the limits to growth".
3. During this period, the government bureaucracy's share of spending has increased from roughly 25% to 50% of GDP; it is difficult to compare figures accurately as the government use to have more trading activities (all the utilities for example) and a lot less "agency/quango" activities.
4. Capitalism, seems to be a least worse option; but it has to keep running just to stay standing still in this environment.
5. Don't expect the government to tell you the truth, wealth in the hands of baby boomers isn't going to get capitalism moving again. Have you noticed how the Bank of England "target" of 2.5% inflation is dropping off the radar?
"Taxation by Inflation" of those who "safely" keep their wealth denominated in fiat currency is pretty well irresistible, when compared to the prospect of fit healthy stone throwing unemployed.
So what advantage did I gain by saving through the 1970's ?
Choice & some freedom !
(In my case the choice and freedom to invest my mortgage and most of my savings in a wreck and spend evenings and weekends renovating & extending it - an activity that is now clogged with new red tape, new taxes and of course unrealistic (?) property prices)
I would suggest that the saver needs at least 50K readily available to achieve those two goods. Real freedom is either health and "nothing left to lose" or health and at least 500K - the latter being the sort of sum that will start to buy the saver entry into most other counties in the world.
Most of us cannot have total freedom as we are bound by family responsibilities which may or may not be balanced by family financial support. (We are up against cultures that have learned the advantages of such bonds - perhaps the Chinese diaspora is a topical example).
For those under say 35, who still have a chance of freedom, I would recommend saving at least the 5K and considering emigration.
If the rest of us, stuck here, do look like making a go of the country in 15 years time, you can always come back several rungs up the housing ladder.0 -
Newly_retired wrote: »Sadly none of my investments has made me any money. My timing was unfortunate but then I didn't plan to inherit when I did. I decided to risk some of my inheritance, and am leaving my S & S ISAs where they are, but have pulled other investments back into savings as I am not happy to take any further risk of losing as much as 25%. I would rather lose to inflation than risk my capital again.
At a say net 2% nominal return on your savings (if you are lucky) you are falling (say) 3% behind inflation
So we have the following rule of thumb/72 applying to your "losings":
72/3 = 24 means you will have lost half of your inheritance, possibly created by the graft of your forbears, within 24 years.
All that without even touching it in any way.
[In reality it will have been used as taxation by inflation because the government will have deficit financed an "investment" of their own and perhaps have bought some votes with your money]
Result.
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Equities tend to maintain a real terms value, ignoring price volatility for other reasons.
I think you may be right but would you like to link to an index tracking investment which after charges, in the various world stock exchange markets, that shows a return in the last 15 years in its local currency ?
[Let alone in terms of after inflation values].0 -
Is it just me, or does anyone else think that the MSE management is starting to get very cavalier and irresponsible in the way it promotes these type of stories?
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?
Unbelievable. Another MSE lowpoint, following the disingenuous article a couple of months ago about NS&I rates of return.Is it just me, or does anyone else think that the MSE management is starting to get very cavalier and irresponsible in the way it promotes these type of stories?
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?
Unbelievable. Another MSE lowpoint, following the disingenuous article a couple of months ago about NS&I rates of return.
I am the MSE management - and you are frankly talking a load of tosh.
Did you read the piece.
It starts by saying the situation and that people should look at debt repaying then goes on to 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 (ALL the accounts below have full £50,000 UK savings safety protection, and rates on taxable accounts are quoted before tax)."
The entire article was to encourage people to be active with their savings and not leave them languishing in poor accounts. Then goes on to talk about the best savings deals out there.
How on earth could this encourage people not to save?
As for PR what possible PR benefit do we get from putting it on our own site?
As for why its in news, this article is an "EDITORIAL COMMENT" pegged on the end of NS&I and it says that loudly. Each week I write one of those in the weekly email and we then publish it in news, as its the only 'timed' section of the site (ie where pieces are dated rather than updated'.
Please don't rely on a headline posted in the forum - go and actually read the content of the piece.
I find this nasty comments about news stories quite frustated. Remember we are writing things for millions of people not the very small very educated group that inhabit the savings board. We have people who don't know what an interest rate is - or have savings at 0.1% and dont know how to check them.
MartinMartin Lewis, Money Saving Expert.
Please note, answers don't constitute financial advice, it is based on generalised journalistic research. Always ensure any decision is made with regards to your own individual circumstance.Don't miss out on urgent MoneySaving, get my weekly e-mail at www.moneysavingexpert.com/tips.Debt-Free Wannabee Official Nerd Club: (Honorary) Members number 0000 -
MSE_Martin wrote: »I find this nasty comments about news stories quite frustated. Remember we are writing things for millions of people not the very small very educated group that inhabit the savings board. We have people who don't know what an interest rate is - or have savings at 0.1% and dont know how to check them.
Martin
Ahhh .. the old dumbing down to make it palatable to the uneducated argument. NOW, I understand.
Fine. OK. Well, here's a challenge for you: Get a new headline writer. Any headline which implies that there are no more savings accounts, only losing accounts is going to have a very significant affect on the attitudes of EXACTLY those uneducated, financially unsophisticated people you suggest you are writing for.
Yes, I did read the article. And, like you Martin, I have a background in journalism. That has taught me that the vast majority of people DON'T read the text of an article to get its various nuanced messages; instead they take 95% of their impressions of what an article is about from the headline.
When that article and the accompanying headline is written by someone who seems to have a position of authority as an expert on finances, there is an increased responsibility to be very mindful of not only what you say in an article, what you intend to say but don't, but also what you might 'say' - and, yes, I accept this - unintentionally.0 -
If you just read the title and first two paragraphs, the conclusion is "if you save in any account, your purchasing power shrinks" (quoted from paragraph 2).
It does remind me of tabloid journalism, where the big text at the start of the article makes sensational claims and the latter parts of the article (the smaller text) try to balance out the initial impression.
If you want people to be more active in the savings, then how about an article to "protect your purchasing power"?0
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