Muppet Money

colsten

Came across an interesting article this morning. According to Henderson Global Investment:

£729bn (half) of the nation’s personal savings is sitting in cash


With rates that low, you would think people would switch regularly, but 85 per cent of instant access savers have not done so in the last three years. Moreover, on £334bn of cash, savers admit they have no idea what the interest rate is at all. The banks and building societies call this “muppet money”


more than half of us do not meet the three months’ income savings threshold, and a third have no savings at all. Meanwhile, just over a fifth of households have net financial wealth of more than £50,000.

For a nation so out of love with our banks, we are still enamoured enough to forgo over £10bn a year in income – that’s about £386 per household per year, or 2.5p off income tax.

Full article
http://www.cityam.com/212800/muppet-money-investors-are-losing-out-billions-parking-savings-cash

AndyT678

Alas the Mrs falls into this category but can I get her to change? I cannot! Apparently it's "too difficult". :mad:

It used to really bug me but I try not to think about it these days - I just go to my happy place.

elwy

That's me. For the past couple of years I've had the attitude: If interest rates are so low across the board, why bother going to the effort of switching? It just barely seemed worth the trouble.

coyrls

AndyT678 wrote: »

Alas the Mrs falls into this category but can I get her to change? I cannot! Apparently it's "too difficult". :mad:

It used to really bug me but I try not to think about it these days - I just go to my happy place.

I'm in the identical position...... not thinking about it is the only path to happiness!

moneyfoolish

AndyT678 wrote: »

Alas the Mrs falls into this category but can I get her to change? I cannot! Apparently it's "too difficult". :mad:

It used to really bug me but I try not to think about it these days - I just go to my happy place.

I'm in the same boat. My wife is a non-taxpayer and I manage to get her to sign a form every now and then so we have got a few high interest current accounts for her but when it comes to things where I have to get any details from her such as transferring some of her tax allowance to me or to register to get back the tax from the pensioner bonds which are in her name she tells me "it's too much trouble for a few pounds"! Unlike you, it still does bug me!

jimjames

elwy wrote: »

That's me. For the past couple of years I've had the attitude: If interest rates are so low across the board, why bother going to the effort of switching? It just barely seemed worth the trouble.

Hopefully this site has changed your mind.

Rates are not low across the board. You can get 0.5% or 5%. That's 10x the amount of interest.

The differential between high and low rates was anywhere near that big when rates were 7% so you have much more scope to outperform a poor savings rate now.

I do think it's incredible that so many people moan about high fuel prices or poor returns on cash yet make no effort to either change supplier and save £300 or move to a better paying account. At a wage of £10 per hour that's pretty much a weeks pay to just move your supplier - a no brainer to me!

On the plus side it does mean that better rates are available to those of us that are prepared to do some legwork which might not be the case otherwise.

mgdavid

I often wonder if these people saw a tenner on the pavement would they ignore it or bend down and pick it up?

gadgetmind

colsten wrote: »

According to Henderson Global Investment:

Summary: "Company that makes money out of investments says that people should be investing more money."

jimjames

gadgetmind wrote: »

Summary: "Company that makes money out of investments says that people should be investing more money."

That's true but I do think people should on the whole be investing more than they do and understanding more about risks. Some posters with hundreds of thousands just held in cash for no defined reason could be doing so much better if they were more diversified with at least some investments.

bowlhead99

mgdavid wrote: »

I often wonder if these people saw a tenner on the pavement would they ignore it or bend down and pick it up?

Just for silly stats: Microsoft made $22bn of profits last year (87bn of revenue). So that's $700 per second, of revenue, 24/7/365.

If you were Bill Gates or Steve Ballmer with about 4% ownership, you're on about $25 a second. If either of them saw a $100 bill there's no point bending over to pick it up as they've already earned more than $100 in the five seconds it would take.

Of course one would expect they would pick it up because you don't make money by ignoring opportunities.

There are probably better examples but the Gates one has been going around for decades (he used to own rather more of the company that he does now, I think he's on track to have zero shares within the next 4 or 5 years).

HSVX

bowlhead99 wrote: »

Just for silly stats: Microsoft made $22bn of profits last year (87bn of revenue). So that's $700 per second, of revenue, 24/7/365.

If you were Bill Gates or Steve Ballmer with about 4% ownership, you're on about $25 a second. If either of them saw a $100 bill there's no point bending over to pick it up as they've already earned more than $100 in the five seconds it would take.

Of course one would expect they would pick it up because you don't make money by ignoring opportunities.

There are probably better examples but the Gates one has been going around for decades (he used to own rather more of the company that he does now, I think he's on track to have zero shares within the next 4 or 5 years).

Bill Gates' net worth went up ~$5bn from 2013 to 2014 (he has a very savvy team of people managing his money, as you would expect), meaning that he net 'earned' around $160 per second that year (after all of his giveaways, of which there were many). Quite staggering really.