Muppet Money

jimjames

enthusiasticsaver wrote: »

It all comes down to apathy and people unwilling to spend time researching. Same people who don't shop around every year for car or home insurance or just stick with the same fuel company without comparing each year.

Problem is that the same people are also vocal about being ripped off by the banks and energy companies and having no money - yet don't take any action to deal with it!

Eco_Miser

elwy wrote: »

That would definitely be worthwhile but the highest rate I could find that suited my situation was 1.5% for easy access savings when I currently get 1%.

When Santander is paying 3% AER on £20k, and other banks more on less, that seems strange.

Remember you can have as many current accounts as the banks are willing to give you, and you can fund the required monthly funding by moving money around by faster payment or standing order, and there are ways to create any required direct debits.

The_Earl_of_Streatham

It surprises me that an industry that

...brought us payment protection insurance, sold us endowment policies for our mortgages, encouraged people to take out mortgages with no repayment vehicle, miss-sold pensions, had us pay for ID fraud protection or credit card protection (*takes deep breath*) sells us over 50 insurance, offered annuity products they could never honour, gave us structured deposit schemes...

should be in the least bit surprised that in difficult economic times we might want to keep our money where we can see it and get at it quickly rather than fall for their blandishments.

bowlhead99

As the article mentions, over half the households have less than 3 months income in savings and a third don't have any savings. So most people don't have cash 'languishing' in accounts that they 'ought' to be investing. I spent more than 3 months income on a car last year and the same on a house deposit the year before so there are plenty of legitimate reasons why people hold cash (and with respect to the conspiracy theorist above, it is not just because people think financial services businesses are out to screw them over).

So basically it is only the people with well over median wealth that need to consider doing something more long-term than cash deposits.

Wealthier individuals have even more cash than they need to meet short-term demands. As the financial year draws to a close, it’s high time savers woke up to the paltry returns they are earning and did something about it. There are plenty of options, and for those with less experience, plenty of good advisers to help.

That's a very altruistic conclusion from Henderson Global Investors that doesn't read like they are hoping people will put more money into investment vehicles at all, honest guv.

To be fair, it's not exactly a harmful article and there are some people with huge cash reserves who should wake up and smell the coffee - people are often surprised on here when they see what rates they can get by shopping around for current accounts let alone how investments outperform cash in the long term. But the idea that 'your current service providers think you are muppets! move your business to us!' is hardly a cutting edge marketing campaign

elwy

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?

I can answer that question.
One day as a poor student walking through campus, I spied a tenner on the path in front of me. I had a moment of pure joy as I realised it was my lucky day and I would be getting the beers in down the Union that evening.
Then my friend swooped in like a hawk and grabbed the tenner off the floor before I could will my muscles to react. He didn't even buy me a beer with it!
Some of us are just born losers

Archi_Bald

The 'facts' used in the Henderson-sponsored article seem to be somewhat similar to data about the savings market that the FCA published earlier in the year.

E.g. FCA says "Almost all adults in the UK (93%) have a cash savings account and approximately £700bn is held in savings accounts.". Henderson though say "a third have no savings at all". Henderson quotes £729bn, similar to the £700bn the FCA has (what's £29bn between friends.....).

FCA says " In 2013, around £160bn of easy access account savings earned an interest rate equal to or lower than the Bank of England base rate of 0.5%. ". Henderson say "What is more, a mind-boggling one quarter of that total wealth is idling in instant access accounts, currently earning less than 0.4 per cent a year.". Again, roughly the same numbers, FCA = £160bn, Henderson = £182bn.

I have read a lot of the FCA report but admit I lost the will to live before I got even to page 50..... nonetheless I think the FCA report largely supports the "muppet" theory, e.g. they say

More than half (56%) of respondents to our consumer survey did not know whether their provider currently offered a similar account with a different interest rate to their savings account in which they had the highest balance. For easy access accounts, 63% said that they did not know.

We tested consumers’ understanding of interest rates by asking questions about what they expect from a variable rate product over time. The answers revealed widespread misunderstanding and unrealistic expectations about how much variable rates could change. This lack of awareness of providers replacing products and cutting interest rates over time could partly explain why many consumers do not monitor rates and/or consider switching.

jimjames

Archi_Bald wrote: »

The 'facts' used in the Henderson-sponsored article seem to be somewhat similar to data about the savings market that the FCA published earlier in the year.

And the numbers also seem remarkably similar to ones that I've seen in other surveys going back several years.

It's bad enough that so many people have no savings but worse that they don't even realise the difference having some savings can make. You only have to see some posts here asking what an emergency fund is to realise the challenge that there is.

coastline

Deposit savings account for around 38% of savings today down from 53% in 1974..
Pensions are climbing rapidly... £96bn in 1974 to £1564bn today..

http://www.lloydsbankinggroup.com/Media/Press-Releases/2014/lloyds-bank/uk-household-savings-rise-by-500-in-the-last-40-years/

http://www.lloydsbankinggroup.com/globalassets/documents/media/press-releases/lloyds-bank/2014/140821-value-of-household-savings-final2.pdf

mgdavid

elwy wrote: »

I can answer that question.
One day as a poor student walking through campus, I spied a tenner on the path in front of me. I had a moment of pure joy as I realised it was my lucky day and I would be getting the beers in down the Union that evening.
Then my friend swooped in like a hawk and grabbed the tenner off the floor before I could will my muscles to react. He didn't even buy me a beer with it!
Some of us are just born losers

I'd have been that swooper - but I would have bought you a beer
:beer:

jimjames

coastline wrote: »

Deposit savings account for around 38% of savings today down from 53% in 1974..
Pensions are climbing rapidly... £96bn in 1974 to £1564bn today..

http://www.lloydsbankinggroup.com/Media/Press-Releases/2014/lloyds-bank/uk-household-savings-rise-by-500-in-the-last-40-years/

http://www.lloydsbankinggroup.com/globalassets/documents/media/press-releases/lloyds-bank/2014/140821-value-of-household-savings-final2.pdf

Misleading info from Lloyd's I think.

I don't see their numbers bearing any relevance to the majority of people and suggesting that savings have increased purely based on pension numbers doesn't ring true either. In the 1970s most pensions were final salary so wouldn't be in the numbers, most now are not.