Are savers being short changed?

lisyloo

Hmm, are you getting a little muddled perhaps and as a result suggesting others are saying things they did not? There appears to be no claim in the quote you gave as to there being a "right". Did you misread it?

I don't think so.
The original question is "are savers being short-changed".
Technically this means not getting something you are due (which I interpret as contractually/legally not morally or in a fantasy).
I don't think savers have been technically shortchanged i.e. been given less than their contract states.
If they have then that matter should be very simply sorted with a formal complaint/FOS.
What is then under discussion is what is reasonable and my view is that if you are constraining your self to variable high st bank rates only and want no capital risk and instant access then it's not reasonable to have high expectations or even inflationary expectations of your return because you are thorwing yourself at the mercy of a commercial organisation who's mission is to behave in their shareholders best interests.
If you expect them to behave in any other way then you are living in fantasy land. They are simply commercial companies.

You also make the astonishing assumption that it's unreasonable to expect any behaviour that isn't a legal obligation.

Not necessarily unresonable.
But when dealing with commercial companies you should not be astonsihed if they behave in their own best interests.
Any other view is naive.

from the way we expect to be treated by way of business in shops to the way we expect children to treat their elderly parents.

I think you are missing up two entirely differnt things there.
Businesses are ONLY out to get money.
Any niceities from staff are an illusion to put you in a good mood and there ONLY motivation to make money. Cruise staff have this down to a fine art.
The way you treat your family where concepts like loyalty, values, morality and fairness exist is completely different.
These values don't exist at all in business and it's naive to think the company cares about you.

To help you, I would assume that by a "decent rate of return" the poster meant one that maintains the value of his savings.

I don't see why it's reasonable to expect that from an amoral commercial organisation.
Perhaps this is where some of us agree to disagree.

Quite reasonable people tend to think that it is unfair for others to benefit from the devaluation of their savings.

That assumes you believe they are.
I'm open to information on that either way, but banks have costs and losses to write off.

Perhaps what most irks savers now is that, unlike 1975, they suspect inflation coupled with low rates is currently being used as a political expedient.

Absolutely. We want them to spend and support jobs in the economy.
An alternaive view is that it's really unfair that they are keeping a tight reign on their money and putting people out of work in the economy by not spending it as they normally would. That actually affects people's lives.

That, I'd assume, is what they feel is politically unfair.

The government have to help everyone, not just savers but works and also (I'm afraid to say) banks. I'm not supoprting the banks at all, but there are a number of groups that need support and some of the requirements are at odds.
From a policitcal pointnof view it's not ALL about savers.

passing judgement on whether what others perceive as being unfair, or even immoral, is reasonable or otherwise seems a fairly pointless exercise best left to the Pope.

Well, you happiness depends on how you perceive your lot, so changing your perception is the best way to improve your happiness.

I'm not judging anyone but I believe if people change their perception to "glass half full" then they'll have a better experience of life.

Further more if they actively build expectations into their financial planning (like a later retirement) then they will be happier longer term. I don't like havihng to mentally move out my retirement date, but I see it as entirely realistic to do so otherwise I'm just planning in a huge dissapointment for myself.

If you really think it's baltantly unfair then whinge for a bit by all means, but they surely once you've got that out fo your system you need to be realistic about how that affect your future i.e. your retirement date and retirement income, and plan accordingly.

pqrdef

lisyloo wrote: »

1% plus RPI is an excellent tax free, (capital) risk free return.

It's the worst ever from granny bonds.

lisyloo wrote: »

It's not the rate that's the issue there, it's bad financial planning if you want an income from £30K.

£30K was the most you could put into the final issue.

Actually though, when £30K would produce £15 a week that could be a useful supplement to a pensioner. £6 a week, not so much.

Rollinghome

lisyloo wrote: »

I don't think so.
The original question is "are savers being short-changed".
Technically this means not getting something you are due (which I interpret as contractually/legally not morally or in a fantasy).

Ah, I see. There is a problem of language. Had English been your first language then you would have interpreted the term ‘short-changed’ in it’s common colloquial sense. A very understandable error.

lisyloo wrote: »

If they have then that matter should be very simply sorted with a formal complaint/FOS.

An excellent tip, thank you.

lisyloo

It's the worst ever from granny bonds.

I don't think it's realistic to expect past performance in the current economic climate.
You need to adjust your expectations to the climate and not just expect past performance in times when inflation was much higher and the economy was growing much faster.
We are of course in an unprecedented period right now, so expectations may even have to be adjusted outside of normal parameters.

Ah, I see. There is a problem of language. Had English been your first language then you would have interpreted the term ‘short-changed’ in it’s common colloquial sense. A very understandable error.

I did actually google the term to make sure I was considering the correct terms of reference and lookking at it objectively. Here are some definitions (not mine).

1. To give (someone) less change than is due in a transaction.
2. Informal To treat unfairly or deceitfully; cheat:

1. to give less money than is due in change
2. to cheat by depriving of something due

3. to give someone back less money than they are owed when they are buying something from you
4. to treat someone unfairly, by giving them less than they deserve

Now I suspect "deserve" is very much a matter for opinion.
But I certainly don't agree that in general we've been given less than "due" in a transaction or treated deceitfully.
I presume by "colloquial" sence that you mean number 4?
I am not sure how you judge how much someone "deserves".
My view is that we can expect or deserve nothing from capitalist buiness that operate in the interests of shareholders except for legal treatment and to operate in accordance with their own advertised mission statements and policies.

dc1606

OK. So what fairly safe options are there for investing £25K( from an Aegon bond not yet cashed) for someone approaching 65 - have posted this elsewhere but had no replies!

nilrem_2

dc1606 wrote: »

OK. So what fairly safe options are there for investing £25K( from an Aegon bond not yet cashed) for someone approaching 65 - have posted this elsewhere but had no replies!

Are you interested in safe savings type accounts or more speculative investments such as shares?

pqrdef

lisyloo wrote: »

I don't think it's realistic to expect past performance in the current economic climate.

If somebody wants to borrow my money to buy a house, I don't see why he shouldn't pay me RPI + 2.5% for the use of my money, whatever the economic climate. If house prices are flaky, that's his problem, not mine, I'm not the one acquiring equity in the house.

On the whole, though, a poor economic outlook would normally be expected to raise interest rates, not reduce them.

cloud_dog

Ah, I see lisyloo is still soldiering on. You are my official MSE hero.
:T :T :T :T :T :T :T :T :T :T :T :T :T :T

Unfortunately some people just don't want to hear.

dc1606

nilrem wrote: »

Are you interested in safe savings type accounts or more speculative investments such as shares?

both really I suppose though I'd rather avoid high risk items - the Aegon bond has not performed as well as I was originally told by IFA ( not blaming him) on 20.8K now 25.5 over 10 years so was thinking about other possibilities whilst I can get at it with no MVR. Maybe it's best where it is?

rdtrdt

It's quite understandable for folks to be upset at the poor rates they're earning on savings (negative real rates). It's a political choice that's been made, to bale out debtors at the expense of their creditors. What probably irks some people is that in some cases, this will equate to rewarding the reckless at the expense of the prudent. Most people would view that as inequitable - you'd probably have to be morally adrift not to recognise that.

I say it's a political decision, which it is, but at the same time I'm sure the politicians don't think they have a huge choice, since it was earlier political decisions (by the previous Govt and G Brown as Chancellor) which enabled our financial sector and many UK households to become so leveraged, and for our economy and the Govt's tax base and spending levels to become so tied to that unsustainable debt-dependent economy.

The previous Govt's oversight of its own finances and the wider economy was pretty appalling, and its this legacy of debt which is the root cause of the current low (negative real) interest rates. As I'm sure most people realise, rates are being set at artificially low levels to incentive spending (vs saving) and most importantly of all to maintain inflated asset (primarily property) prices.

If rates were being set solely by market forces, or at levels commensurate with the BoE's inflation target, they would be a great deal higher than currently. Unfortunately, this would probably ensure that property prices would correct very sharply indeed, resulting in much of our banking sector becoming insolvent - pretty much a collapse to make Oct 2008 look like a tea-party. That's a scenario in which savers don't do well at all: depending on how exactly it played out, savers would either lose a big chunk (or even all) of their deposits or see an overnight collapse of Sterling (and thus drastic reduction in purchasing power), or a combination of the two. Many of them would also lose their jobs as the economy tanked on the failure of its banking system, and the risk of social unrest etc from a collapsed economy.

So the route being followed will be viewed as the lesser of two evils. Unfair on very many people, especially unfair to those who were prudent and gained little from the previous debt-frenzy, but better than the alternative of a major collapse.

lisyloo is right to encourage people to consider alternatives to how they might find the returns they'd like. But there's no hiding from the fact that it's a kr@pp choice people are being given, where they're being forced to take on risk if they wish to obtain anything more than paltry returns.

This is real risk, remember, so many of those taking it will end up with even worse returns than if they'd stuck to the negative real returns they'd get from a savings account. It's Hobson's choice - compounded by many of these folks being elderly - the last people who should be being encouraged to take significant risks, and whom society should be looking out for, not confiscating their savings through inflation, savings which they have no employment from which to replenish them.