Why bother with Savings Accounts?

MonkeyMad

Nope I'm lost now. You have done your homework, we have established it is only possible to lose money by not doing your homework, so I would have though you would be ramping in with everything you had and leveraging for more, since this one is gonna triple? You shouldn't even need a counter position. Or is there actually some risk notwithstanding that you are investing in the Dollar which is hardly a rock-steady currency at the moment.

LIB3RTY

MonkeyMad wrote: »

Nope I'm lost now. You have done your homework, we have established it is only possible to lose money by not doing your homework, so I would have though you would be ramping in with everything you had and leveraging for more, since this one is gonna triple? You shouldn't even need a counter position. Or is there actually some risk notwithstanding that you are investing in the Dollar which is hardly a rock-steady currency at the moment.

You create a small basket of investments to profit overall. A basket needs countermeasures to ensure profit overall.

ruperts

Interesting. What has been your annual return since 2009 OP? Must be quite a bit more than 40% if gold at 40% has been your worst performer.

Glen_Clark

LIB3RTY wrote: »

never buy at peaks.

A couple of years ago Aggreko hit a peak of £8.(having quadrupled my money, I sold - but thats not my point) It was still a great buy, even though it was at its peak, because now its £22

PS: Don't rely on the google chart for Aggreko shares, because its wrong. Look at another chart and you will see the difference.

LIB3RTY

ruperts wrote: »

Interesting. What has been your annual return since 2009 OP? Must be quite a bit more than 40% if gold at 40% has been your worst performer.

I've made just over £20K profit since then, and I started off with £7500. So about 266% increase in roughly 3 years. So taht makes it roughly 53.5% Annual return each year.

I would have made more had I been more confident in myself early on. I missed the boat on AGQ.L which I was tipped to buy into back when it was under £0.06 per share. I still feel sick when I see that chart

GeorgeHowell

A minority of people probably do have a knack - a sixth sense - in picking investments. Coupled with a high tolerance of risk and some luck they can certainly make a lot of money. The same applies to people who back horses. The OP may be one such, and is probably young and thus able to contemplate losing a small fortune and building it up again.

For those with a low tolerance of risk, however, the pain of losses outweighs the euphoria of gains. In addition older investors, particularly the retired, cannot usually reckon on necessarily regaining losses, and in the absence of earned income are more reliant on capital, and income from capital, to maintain a reasonable standard of living.

So the point of savings accounts is to provide somewhere to safeguard funds, with some sort of return, for those with a low tolerance of risk, and those who for whatever reason cannot contemplate substantial capital losses, even in the short/medium term.

Of course the deliberate policy of creating inflation by HMG is obscene, and is founded on the political considerations of inflating away government debt and appealing to younger voters who tend to be borrowers rather than savers. Nevertheless by shopping around and being willing to change between accounts and banks, maximising the use of cash ISAs, and tieing up monmey for periods if it's not required in the short term it is possible to achieve rates which go a long way towards offsetting inflation. Unfortunately inertia and a false sense of loyalty towards financial institutions that they have used for years prevents enough people from taking those steps.

Glen_Clark

GeorgeHowell wrote: »

and appealing to younger voters who tend to be borrowers rather than savers.

There are about 6 savers to every borrower. The savers tend to be older, and politicians are more interested in the elderly because they are more likely to vote. Why do you think the over 65's payless tax on the same income? Or get higher benefits - the state pension is higher than benefits the under 65's get when sick or unemployed?
Money printing is more to do with keeping interest rates low to maintain house prices - again very popular witth the elderley, and politicians with multiple properties. And necessary to stop borrowers going into negative equity, handing back their keys to the bankers, and leaving the bankers facing bigger losses.
Politicians will tell you the money printing is to stimulate the economy. But the fact is that even with the Bank Of England printing money like lunatics small businesses still can't get loans, because investors would rather put their money into property than productive industry - as long as the Government keep strangling the supply with their green belts to maintain house prices.
Problem is that the propertyprice bubble isn't generating any real wealth. Just transferring wealth from the poor to the rich and creating social unrest.
The obsession with house prices is a British disease. Strong, productive economies like Germany don't do house price bubbles.

Thrugelmir

Glen_Clark wrote: »

Strong, productive economies like Germany don't do house price bubbles.

Different history. Different culture. Different housing market.

PS. QE and current interest rates have little to do with fixation of house prices.

ruperts

LIB3RTY wrote: »

I've made just over £20K profit since then, and I started off with £7500. So about 266% increase in roughly 3 years. So taht makes it roughly 53.5% Annual return each year.

I would have made more had I been more confident in myself early on. I missed the boat on AGQ.L which I was tipped to buy into back when it was under £0.06 per share. I still feel sick when I see that chart

53.5% is very impressive. For how many years do you think you can maintain that level of return? At that rate it will only take you another ten years to become a millionaire with no additional investment. Another 15 years after that and you will be a billionaire. If you could keep it up for 43 years from today you'd have £1,158,323,787,513.00

GeorgeHowell

Glen_Clark wrote: »

There are about 6 savers to every borrower. The savers tend to be older, and politicians are more interested in the elderly because they are more likely to vote. Why do you think the over 65's payless tax on the same income? Or get higher benefits - the state pension is higher than benefits the under 65's get when sick or unemployed?
Money printing is more to do with keeping interest rates low to maintain house prices - again very popular witth the elderley, and politicians with multiple properties. And necessary to stop borrowers going into negative equity, handing back their keys to the bankers, and leaving the bankers facing bigger losses.
Politicians will tell you the money printing is to stimulate the economy. But the fact is that even with the Bank Of England printing money like lunatics small businesses still can't get loans, because investors would rather put their money into property than productive industry - as long as the Government keep strangling the supply with their green belts to maintain house prices.
Problem is that the propertyprice bubble isn't generating any real wealth. Just transferring wealth from the poor to the rich and creating social unrest.
The obsession with house prices is a British disease. Strong, productive economies like Germany don't do house price bubbles.

Don't agree with much of that analysis.

The elderly are more likely to vote, and they also generally have more disposable money. But like marketing people, politicians are still largely obsessed with the 'yoof' market, on the mythical assumption that once you snare them you've got them for life. In both cases it overlooks the fact that people change as they get older and their politics, like their spending habits, may well change. Politicians and marketeers also probably think that older people are not going to be around long enough to be worth investing too much resources into.

Retirement pensions should be higher then sickness or unemployment benefits. Firstly there should be incentives not to remain sick or unemployed any longer than necessary. Secondly when the sick and unemployed return to work their income is likely to increase again. Retirees do not have that opportunity.

Money printing is mostly about reducing government debt the easy way on the pretext of stimulating the economy -- ie being seen to be doing something. Likewise ultra low interest rates. But the higher than target inflation so caused and tolerated is legalised state theft.

Generally the elderly should not be any more interested in high house prices than the young unless they plan to downsize or liquidate some of the capital in some way. I do agree however that house prices represent a huge mirage in the UK, and many people who would benefit from them being lower still experience the irrational feel-good factor when they find out that their house is worth more than it was a year ago.

The reason that people would rather put their money into property than productive industry is because usually it is safer -- the risk of capital loss is smaller, the risk of total loss is negligible, and it better offsets inflation over a long period.

There are a great many reasons why the German economy is immeasurably stronger and more successful than ours, including the one that you quote.