Interest rates so low - don't bother saving!

kazd

I really don't understand the mindset of people who say this, just read some comments in an article in the daily mail. The article was saying that average monthly savings have risen to approx £90 per month. One of the commentators said it was not worth saving as rates were so low.

I offset so I save interest rather than receive interest but even if I the rate was 0% I would still save as it is a pot of money for emergencies.

Macca83_2

I hear that alot too. Mainly from older folk who can remember the days when their savings were generating them more interest than my monthly wage. Im just happy that I can maintain a small emergency pot regardless of interest.

marathon_man_3

Our intention, in our pensionable years, was for my wife and I to boost our income from the interest on our savings. We would have been spending that interest income thus boosting the economy (to a tiny extent, though!).

However, to get by each month, we are having to eat into our savings in order to meet our day-to-day living expenses. This is not how we planned it to be and it seems that the current Bank of England policy is geared to helping borrowers rather than those of us who put money away, throughout our working lives, for what we intended to be a comfortable retirement.

le_loup

marathon_man wrote: »

it seems that the current Bank of England policy is geared to helping borrowers rather than those of us who put money away, throughout our working lives, for what we intended to be a comfortable retirement.

No. It is being done to help the economy.
You could have achieved your retirement dreams had you invested in things other than cash.

The above is controversial but true.

dtsazza

Don't forget that even if rates were currently zero, the more you save now, the more you'll have earning interest when the rates do go back up.

In the short term (i.e. a few years), the benefit of saving is almost entirely in the capital put aside - interest will add only a small amount whether rates are 0% or 5%. In the long term, compound interest adds a lot - but is anyone expecting rates to stay low for the long term?

JohnRo

le_loup wrote: »

No. It is being done to help the economy.

It's been done by the banks to help the banks, and to try and maintain the housing price bubble which is about the only tangible wealth they have left to cling to. It helps the wealthy who do benefit, whether their experiment will help the wider economy to benefit remains to be seen, the government and everyone else are just passengers.

ILW

Low rates are one thing, but BoEs failure to control inflation is woeful.

Glen_Clark

Macca83 wrote: »

I hear that alot too. Mainly from older folk who can remember the days when their savings were generating them more interest than my monthly wage..

They are usually fools who don't realise that inflation costs them as much as they earn in interest.

arcadia00

dtsazza wrote: »

In the long term, compound interest adds a lot - but is anyone expecting rates to stay low for the long term?

Why not, Bank of Japan has been at 0.1% for last 13 years and less that 1% for several years before that.

ILW

arcadia00 wrote: »

Why not, Bank of Japan has been at 0.1% for last 13 years and less that 1% for several years before that.

They have also had long term deflation, so some reward for saving.

Glen_Clark

We are still getting conflicting messages from the Government.
On the one hand we need to spend more to get the economy moving.
On the other hand we need to save more for our retirement as people are living longer. (Raising the retirement age is not a solution because there are not enough jobs for the young, let alone the old.)