Shrinking savings put millions at risk of reposession

chucknorris

Clifford_Pope wrote: »

You means you have shifted your savings spread so that it now tends more towards the longer-term? It's all still "savings". A sensible saver would have a spread of access terms, ranging from instant, 1-month, 6 month, 2 years, up to long-term investment locked away for 10 years or more.
The proportions would differ for different people and circumstances.

It is not all savings, savings and investment are two different things, they are not the same for the very reasons that you have highlighted, timescale, and accessibility, but there is also risk to consider.


EDIT: Although you can of course have longer term savings, i.e. tied up for a few years but these are not investments, they are still savings. It is the risk that differentiates this type of savings from investments. I still have one of these savings accounts paying 5.15%, but it matures this October.

wotsthat

mayonnaise wrote: »

Ignore me.
Got it now.

This is why Shelter's surveys are structured in the way they are - they are never repeated and each one is subtly different. You're not meant to easily compare one survey with another in case you come to the unfortunate conclusion that things are getting better.

That wouldn't do.

CLAPTON

Clifford_Pope wrote: »

You means you have shifted your savings spread so that it now tends more towards the longer-term? It's all still "savings". A sensible saver would have a spread of access terms, ranging from instant, 1-month, 6 month, 2 years, up to long-term investment locked away for 10 years or more.
The proportions would differ for different people and circumstances.

off topic, but why would a sensible saver have a spread of access terms?
expect for pensions why would I lock away anything for 10 years or more ?

N1AK

Clifford_Pope wrote: »

It's all still "savings".

You're both right and wrong. In the context of this argument I am sure it makes sense to lump 'savings' and 'investments' together because someone with huge investments can almost certainly get some back to pay for a mortgage if they need to.

Generally, especially in the context of a forum on money, it is useful to keep the definition of savings as effectively no risk and investments as having risk.

Thus it would be possible for someone to have thousands of pounds of investments but only have a few hundred in cash/savings.

chucknorris

N1AK wrote: »

You're both right and wrong. In the context of this argument I am sure it makes sense to lump 'savings' and 'investments' together because someone with huge investments can almost certainly get some back to pay for a mortgage if they need to.

I would agree, but my comment was explaining why someone said 'who saves nowadays?' (or similar), so not so much keeping specifically on the thread subject, but explaining what (I thought that) he meant by that statement.


The low savings rates has forced me to address an issue that was long overdue anyway, to balance out my portfolio which was too low on pension and shares. It is still top heavy in property, but I'm happy to live with that for now, but I have moved away from holding cash.

chucky

wotsthat wrote: »

This is why Shelter's surveys are structured in the way they are - they are never repeated and each one is subtly different. You're not meant to easily compare one survey with another in case you come to the unfortunate conclusion that things are getting better.

That wouldn't do.

Shelter have their own understandable agenda. I'm sure if this was a massive issue the mortgage payment details and missed payments would have been highlighted and been a problem already.

It's scaremongering by the usual suspect on this forum.

antrobus

wotsthat wrote: »

This is why Shelter's surveys are structured in the way they are - they are never repeated and each one is subtly different. You're not meant to easily compare one survey with another in case you come to the unfortunate conclusion that things are getting better.

That wouldn't do.

Yes, I believe the OP guilty of the crime of taking of taking one statistic and reaching a conclusion. One number on its own is fairly meaningless; you need other numbers to compare it with.

I would draw people's attention to the following paper,

The wealth and saving of UK families on the eve of the crisis, July 2010
http://www.ifs.org.uk/comms/r71.pdf

which is an actual bit of research carried out by a 'respected' think tank.

Incidentally, there's a nice graph on page 5 of the Household saving ratio 1963–2008, that shows how hard Gordon Brown worked to get that number down to zero. But anyway, the IFS study is based on data for household wealth and savings in 2000 and 2005, and states;

There was little change in this measure between the two years for which we have data, with approximately 47% of families having less than £500 in net financial wealth and approximately 36% having less than £500 in gross financial wealth in both years.

We can consider these families ‘at risk’ of having no private safety net in case of a sudden fall in income (or a sudden increase in spending needs, such as a deterioration in health).

I would therefore conclude that there have always been millions of famillies 'one paycheque away from reposession', and to state that "Shrinking savings put millions at risk of reposession" would be quite wrong, because these millions never had any flippin' savings to shrink in the first place.

lisyloo

expect for pensions why would I lock away anything for 10 years or more ?

Generally the reason is to get a better return.
In some cases (stocks and shares for example) it isn't a formal time period but you would be sensible not to consider it as a short term investment because of volatility.
I guess you could categorise that as capital risk rather being locked away, if you prefer to look at it that way.

I don't personally have these different time barrs. A lot of my investments are instant access, however I don't regard them as short term/instant access vehicles and there is some risk in doing so.
As I said you could either recognise that as an instant access risky investment or as a longer term safer bet. I tend to do the later.

CLAPTON

lisyloo wrote: »

Generally the reason is to get a better return.
In some cases (stocks and shares for example) it isn't a formal time period but you would be sensible not to consider it as a short term investment because of volatility.
I guess you could categorise that as capital risk rather being locked away, if you prefer to look at it that way.

I don't personally have these different time barrs. A lot of my investments are instant access, however I don't regard them as short term/instant access vehicles and there is some risk in doing so.
As I said you could either recognise that as an instant access risky investment or as a longer term safer bet. I tend to do the later.

yes of course I agree and my point was a little pedantic.

one seeks the best return for any perception of risk.

if that happens to be linked to the period of 'lock in' then that affects the risk
but there is no sense in actually seeking a lock in period as a matter of investment policy other than how it affects return and risk

wotsthat

chucky wrote: »

Shelter have their own understandable agenda. I'm sure if this was a massive issue the mortgage payment details and missed payments would have been highlighted and been a problem already.

Early in 2012 Shelter reckoned one million people took out a payday loan to help pay their mortgages in 2011. i.e. even less than a paycheque away from not being able to pay the mortgage.

It's miraculous how few of the desperate people identified by Shelter actually find themselves in arrears, repossessed or homeless - ever.