Savers - a call to arms!

Cleaver

nearlynew wrote: »

I didn't mention, nor would I want "higher than inflation returns".

Just my money to hold its value.

We'd all like our money to hold its value. But unfortunately it doesn't. So we all have to find ways of ensuring that it does.

Lokolo

Cleaver wrote: »

Whilst no situation is perfect, the IFA in your example is not doing their job correctly. My understanding of an IFA is to listen to a customers requirements, profile their risk tolerance and objectives and build a portfolio based around them. I guess a great IFA might actually advise you to keep 75% of your money in cash if that's what suits your objectives and risk profile. I'm not an IFA, but if I met a pensioner who had £200k in a 0.4% interest account and seemed very adverse to risk I might suggest that they leave 50% of it in cash, then have very conservative 'investments' in index linked bonds etc. I certainly wouldn't be advising them to dump £150k in some Far East Small Caps Venture Fund.

Your argument seems to be along the lines that a pensioner shouldn't get financial advice because they could get a dodgy IFA. But you take that risk with every service or product you buy, so surely you shouldn't let that risk stop you doing what you need to do. For example, not all bathroom fitters are great, but you shouldn't let that put you off getting your bathroom done if it needs doing.

I stand by my reasoning that if you have £200k in the bank you should be doing something constructive with it.

But there are very limited options available. Index links are no no. If the person needs access to the money over the shorterm what can they do with it?

Especially someone who is retired, isn't going to know what they want to do in a year or 2. They may want to give some money to their children if they happen to be going into higher education. Or they may want to go on a cruise. I know when (if) I turn 80 I'm not going to want investments because I am going to want to spend it on alcohol and hookers, so I won't want to tie up the money for longterm, so the only option I have is cash (and at this rate of inflation I'll be a hooker less every year!)

Because of this shorterm-ness, theres nothing but cash. And as Monkey says, the older you get, the more you want in cash because you don't want it tied up.

Cleaver

Lokolo wrote: »

But there are very limited options available. Index links are no no. If the person needs access to the money over the shorterm what can they do with it?

Especially someone who is retired, isn't going to know what they want to do in a year or 2. They may want to give some money to their children if they happen to be going into higher education. Or they may want to go on a cruise. I know when (if) I turn 80 I'm not going to want investments because I am going to want to spend it on alcohol and hookers, so I won't want to tie up the money for longterm, so the only option I have is cash (and at this rate of inflation I'll be a hooker less every year!)

Because of this shorterm-ness, theres nothing but cash. And as Monkey says, the older you get, the more you want in cash because you don't want it tied up.

But surely if you're 80 you won't mind having most of your money in cash, because if you financially planned throughout your life you've built up your money through a wide range of investment vehicles?

But I still think, even if you're 80, you won't need 100% of your cash in the short term. If you do then you won't really mind the low interest rates as you're about to spend it all anyway. Let's say you are 80 and you have £100k. The scenerios are:

1) You plan to blow the whole £100k over the next year on cruises, hookers and little Bob's school fees. If that's the case, who cares whether you earn 1% or 5% on the money over the next year? It'll all be spent soon anyway. Can't believe I just used the words 'blow' and 'hooker' in the same paragraph.
2) You plan to spend £50k on cruises, hookers and little Bob. You've no plans to spend the other £50k so stick it in a mixture of cash, index-linked, fixed-interest, funds, shares, casinos and any other investment or saving vehicles that fit your risk profile.
3) You plan to spend £10k on a boat ride, low grade call girls and buy Bob a fancy calculator. You now need an investment and saving plan (as above) for the other £90k.

So I'm still not convinced that there's anyone out there who needs all their money in cash. And if you do require your entire wealth in cash, surely that's because you're about to need it all, so who cares that much about the interest rate in the short term?

lisyloo

Just my money to hold its value.

Then do something about it then !!!
I would suggest a balanced portfolio that balances liquidity, inflation risk, capital risk and better return.

Inflation is theft.

Utter tosh.
If the price os oil goes up because of demand then that isn't theft.
Stop whinging, Accept reality and do something constructive about your situation.

nearlynew

lisyloo wrote: »

Then do something about it then !!!
I would suggest a balanced portfolio that balances liquidity, inflation risk, capital risk and better return.



Utter tosh.
If the price os oil goes up because of demand then that isn't theft.
Stop whinging, Accept reality and do something constructive about your situation.

the rising price of oil doesn't cause inflation.

I think you ought to do something constructive and educate yourself.

bendix

nearlynew wrote: »

the rising price of oil doesn't cause inflation.

.

it doesn't?

what does, then nearlynew.

Oh . . . .right .. let me guess. the New World Order? Not you too, surely?

Cleaver

nearlynew wrote: »

the rising price of oil doesn't cause inflation.

I could write my entire knowledge of inflation on the back of a stamp, but if the price of oil rises, the price of petrol will follow, as will the cost of producing, exporting and transporting goods which effects the cost of everything you buy?

So isn't the rising price of oil both a major effect on CPI and RPI? How do you see that the rising price of oil doesn't cause inflation?

nearlynew

bendix wrote: »

it doesn't?

what does, then nearlynew.

Oh . . . .right .. let me guess. the New World Order? Not you too, surely?

rising prices are a symptom of inflation, not a cause.

ILW

nearlynew wrote: »

rising prices are a symptom of inflation, not a cause.

Err..............

ILW

Cleaver wrote: »

I could write my entire knowledge of inflation on the back of a stamp, but if the price of oil rises, the price of petrol will follow, as will the cost of producing, exporting and transporting goods which effects the cost of everything you buy?

So isn't the rising price of oil both a major effect on CPI and RPI? How do you see that the rising price of oil doesn't cause inflation?

There are many causes of inflation, the oil price is but one. much inflation is caused be expectation alone.