Nationwide Oct: +0.6%

the_flying_pig

ukcarper wrote: »

I deleted post because I made a mistake and it would be about 6% but thats twice most banks pay.

yeah, i'm not bothered about the exact figure, just the fact that it's a return on equity & not to be confused with anything else.

ukcarper

the_flying_pig wrote: »

yeah, i'm not bothered about the exact figure, just the fact that it's a return on equity & not to be confused with anything else.

It's not eaxactly that is it it's a return on the intial investment. The returns are increased as is the risk, being risk adverse I wouldn't do it myself but I can see in certain circumstances it would be OK.

wotsthat

Graham_Devon wrote: »

Clearly I understood it and I honestly fail to understand why you guys are trying to reinvent the wheel explaining something I've already stated.

He is indeed saving 10k.

He's not generating 10k to spend though, which is what he was trying to imply.

So you get it, agree the principle, agree our homeowner is better off by whatever the imputed amount is and has more money to spend than his renting twin.

Looks like the usual - you don't like who said it rather than what they said.

Graham_Devon

wotsthat wrote: »

So you get it, agree the principle, agree our homeowner is better off by whatever the imputed amount is and has more money to spend than his renting twin.

Looks like the usual - you don't like who said it rather than what they said.

No, the bold bit is where you went wrong. The rest we agree on. His renting twin may have a different income, have a lower rent, live in a different type of house....as with most people up and down the country.

Have a look at what Hamish stated, implying he had a 10k INCOME from this and that he can spend his 10k savings on sandwiches. That's all I took issue with. It's obviously wrong, as just because you are making a saving buying one product as apposed to another, it doesn't mean you have the cash in your pocket. This is absolute basic common sense which you are all trying so desperately to refute.

I said he's saving 10k compared to what he would have to otherwise pay to rent the equivilent house that he had chosen. You've all tried so damn hard to take it so far out of proportion, it's stupid.

the_flying_pig

ukcarper wrote: »

It's not eaxactly that is it it's a return on the intial investment...

well, that's right, hence my initially calling it a, "kind of post tax return on equity". but return on initial investment doesn't tell you an awful lot, especially if the investment was made a long time ago.

wotsthat

Graham_Devon wrote: »

No, the bold bit is where you went wrong. The rest we agree on. His renting twin may have a different income, have a lower rent, live in a different type of house....as with most people up and down the country.

Have a look at what Hamish stated, implying he had a 10k INCOME from this and that he can spend his 10k savings on sandwiches. That's all I took issue with. It's obviously wrong, as just because you are making a saving buying one product as apposed to another, it doesn't mean you have the cash in your pocket. This is absolute basic common sense which you are all trying so desperately to refute.

I said he's saving 10k compared to what he would have to otherwise pay to rent the equivilent house that he had chosen. You've all tried so damn hard to take it so far out of proportion, it's stupid.

I said 'twin' - I meant, obviously, his doppleganger living in the same house, same circumstances, and same income etc. Why would I bring another set of variables into it? Maybe one likes a sandwich from Pret and the other from Asda - who cares?

Hamish, let's call him something else if it helps, either has the money in his pocket or he's already spent it. It's splitting hairs because it's effectively the same as income.

I'm not sure if imputing savings is the same for discretionary and non-discretionary spending. I'd see hamish's example as being real money because if he's not a homeowner then he's a renter. If he said Mrs. McTavish just saved 50% on a pair of shoes and he was off down the pub to spend the 50% she saved I'd think he was a bit 'special'.

dryhat

wotsthat wrote: »

Hamish, let's call him something else if it helps, either has the money in his pocket or he's already spent it. It's splitting hairs because it's effectively the same as income.

Doesn't this "imputed rent" thing only work if you own the house and still have an income. Therefore any extra income that you are not paying in rent becomes available to spend.

Someone with no income but living in a million pound house that they own outright can't claim that the 3k (or whatever the figure is) a month they would be paying in rent is money they have available to spend.

This is what Graham is on about, I think.

In the same way you cannot claim any equity in your house as money in your pocket unless you sell the house.

ruggedtoast

I honestly can't even work out what you are all arguing about now. Graham has tied you up in knots good and proper.

Its incredible how he does it, masterful.

Graham_Devon

ruggedtoast wrote: »

I honestly can't even work out what you are all arguing about now. Graham has tied you up in knots good and proper.

Its incredible how he does it, masterful.

Well dryhat worked it out easy enough!

wotsthat

dryhat wrote: »

Doesn't this "imputed rent" thing only work if you own the house and still have an income. Therefore any extra income that you are not paying in rent becomes available to spend.

I don't know why so many different variables keep being introduced. Hamish's figures are like for like based on his circumstances - if these circumstances change then so will the imputed costs. Obviously if he doesn't own all the house then the cost of finance needs to be taken into account when working out the imputed cost.

If, say, he loses his income it's still real money - he'll need to dip into savings less because his renting 'double' still needs to find the rent. Under some circumstances it's possible that the number could be negative - just not the circumstances he's now in.

It's just a way of expressing the opportunity costs - real money - we all make these calculations every day.