Interest rates so low - don't bother saving!

lvader

ILW wrote: »

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

Inflation is 2.7%, regardless of targets (which are just that) 2.7% is historically low.

grey_gym_sock

i try to look at it positively ... when i spend money, i think about how i'm boosting the economy ... when i save it, about how i'm saving for my retirement ...

the government are about the last ppl i'd want to take advice from, anyway.

ILW

lvader wrote: »

Inflation is 2.7%, regardless of targets (which are just that) 2.7% is historically low.

Not in a recession.

Glen_Clark

ILW wrote: »

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

Spot on.
Interest rates are almost irrelevant if you ignore inflation.
Its the (net) rate of interest minus the (real) rate of inflation, that matters.
At the moment hat figure is negative, to borrowers are being paid to borrow money. In real terms borrowers will pay back less than they have borrowed. Lenders will get back less than they have loaned. Its an indication of the Governments desperation to prop up UK house prices and the bankers debts that are dependent on them.
http://www.bloomberg.com/news/2012-07-04/devaluing-the-pound-isn-t-a-solution-it-s-default.html

marathon_man_3

le_loup wrote: »

You could have achieved your retirement dreams had you invested in things other than cash.

I didn't invest in cash.
I invested in various things during my working life then cashed in as I approached retirement expecting the interest income to supplement my pension.

le_loup

Well you would have been better off putting it into income generating stocks and corporate bonds.
Cash has always underperformed inflation.

le_loup

ILW wrote: »

Not in a recession.

Are you certain of that?
I seem to remember MUCH higher inflation rates in the early 90's and early 80's ... in fact every recession since I've been alive.

jimjames

marathon_man wrote: »

I didn't invest in cash.
I invested in various things during my working life then cashed in as I approached retirement expecting the interest income to supplement my pension.

With potentially 30 years of retirement having savings/investments that keep pace with inflation is something that is worth thinking about so not being 100% in cash. In most situations it is the income that matters not the capital value that may fluctuate day by day.

You can still get decent returns on equity income funds and on bonds.

gadgetmind

I don't intend to change my asset allocation one jot at the time I choose to retire.

C_Mababejive

Rather than saving, i have biased my wad toward investment and will build up manageable debt and let its value inflate away over time. Just like HM Government do.