Savers - a call to arms!

lemonjelly

http://www.bbc.co.uk/news/business-12466074

Interesting article on the bbe highlighting the situation savers find themselves in, specifically those who rely on savings income.

That sound you can hear is the sound of the grey vote manouvering into place...;)

Cleaver

I'm going to sound really unsympathetic here, but my view is...

If you have a 'small' amount of money as a lump sum, maybe £10,000 or £20,000 then the difference in interest between maybe 2% and 5% is not really going to make that much difference to your overall life. If you have £20k then your monthly interest at 2% is around £33 and at 5% it's £83. I know that's a difference of £50, but you're not going to be able to live off either of them. Presumably the rest of your income is pensions, wages etc. which are often related to inflation.

If you have a serious amount of money (let's say £100k+) then you wouldn't dream of having this as cash, you'd have it invested in something that protects it.

Or am I being a bit harsh? If you have £250k and you want to live off the income then cash savings is, and has never, been the correct route to take in my opinion. I'm not saying you should blow the money on AIM oil shares, but you have to take some risk.

Mikeyorks

When you read this in the introductory paras ........ doesn't really qualify the article for much further consumption?

Those paying the 40% tax rate needed to find an account paying 6.67% - only available from 21 Individual Savings Accounts (Isas).

....... I'd be curious where the '1' is ....... let alone the '21'.

StevieJ

Cleaver wrote: »

Or am I being a bit harsh? If you have £250k and you want to live off the income then cash savings is, and has never, been the correct route to take in my opinion. I'm not saying you should blow the money on AIM oil shares, but you have to take some risk.

NS&I Tax free index linked
Bonds (In ISA)
Cash Isa
Stock market (spread around home and abroad, but mainly income funds).
GOLD

StevieJ

Mikeyorks wrote: »

When you read this in the introductory paras ........ doesn't really qualify the article for much further consumption?




....... I'd be curious where the '1' is ....... let alone the '21'.

Halifax 4 year fixed ISA is 4.25% which would be equivalent to around 7% to higher rate tax payer.

lisyloo

I am somewhat unsympathtic as well.
If you are relying on savings income then it would have been a good idea to protect your savings (or part of) from inflation by getting an index-linked product.

We hear a lot about personal responsibility and moral hazard when it comes to borrowers.
The same applies to savers.
Those who have planned their finances poorly and have taken risks (inflation risks in this case) have to face the consequence.

If someone speculated with their capital and lost we'd have no sympathy, so I don't really understand the sympathy for savers who've take inflation risk.
You don't exactly have to be sa sophisticated investor to recognise inflation risk and buy an index-linked product.

I'm not saying I'm glad, but what responsibility we put on borrowers ffor financial planning should apply to savers as well.

CloudCuckooLand

£50 a month...I'd guess that plenty of pensioners would think that a substantial sum...

When Council Tax goes up by, say £100 a year,
When Gas/Electric goes up by, say £100 a year,
When petrol has perhaps gone up by £100 a year,

Not having the £600 interest, means you have to eat into your savings by £300 and next year your interest to boost your pension income is even smaller, a slippery slope to having no lump sum at all.

And the £20k is probably to buy car/boiler/roof/windows in the next 20 years of retirement, so it needs to be growing with inflation (or somewhere close to)

abaxas

Time to get a few mates together and 'big society' rate setting.

lostinrates

lemonjelly wrote: »

That sound you can hear is the sound of the grey vote manouvering into place...;)

The roar of crepitis?

Cleaver, I think you'd be surprised how unsavvy some people are. May parents? Their work pensions, a few Premium bonds,cash, one (or two?) of those endowment policy things, which would probably be better used to line a cat litter tray, their house. Not so much as an ISA.

edit: us...much the same, come to think of it!

IronWolf

£50 a month is a good SKY package!

CloudCuckooLand

lisyloo wrote: »

We hear a lot about personal responsibility and moral hazard when it comes to borrowers.

...what responsibility we put on borrowers ffor financial planning should apply to savers as well.

Do we? We let people walk away from all manner of debts.

Please remind me of the responsibility we place on borrowers.

I am struggling to think of 1.

Meanwhile some people get to repeat their mistakes... http://forums.moneysavingexpert.com/showpost.php?p=41220124&postcount=1