What will happen when interest rates rise?

Graham_Devon

CLAPTON wrote: »

ok

you are right ; I am out of touch : you have shown me the light and I now see that
absolutely no-one under some-yet-to-be- agreed-age (or thereabouts) can possibility save a penny.

Indeed. And as if by magic there you go with the extremes again....

Graham_Devon wrote: »

I feel this will be another merry go round argument where you flip flop from one extreme to the next.

CLAPTON

Graham_Devon wrote: »

Indeed. And as if by magic there you go with the extremes again....

OK

do share your actual moderate view

what percentage of people under some yet-to-be-agreed-age can save some money?

chucknorris

wotsthat wrote: »

I fear we've bought into the extreme idea that the whole of life has to be put on hold to buy a house - it doesn't.

I was surprised at how many of my dissertation students talk about the problems of working, studying, bringing up a family and doing up their house/flat all at the same time.

wotsthat

CLAPTON wrote: »

OK

do share your actual moderate view

what percentage of people under some yet-to-be-agreed-age can save some money?

<<<<<Thread Ends>>>>>>

MFW_ASAP

midnight_child wrote: »

Really? Your utopian ideal seems not reflect reality as ONS says 16-24 is the most indebted age bracket (excludes property debt). http://www.ons.gov.uk/ons/dcp171776_412308.pdf

The confirmation bias is strong with this one....

From your posts you seem to not be asking a general question to gain a balnce of opionions, but looking for confirmation for your view that people are going to really struggle when interest rates climb. Typical 'bear' activity that we have seen on here many, many times over many, many years.

The reality is that outside of obsessive financial discussion forums, people just make do and get on with their lives. If rates rise, people will grumble and then adjust. The sun will still rise in the east and go down in the west, Christmas will continue to occur on the 25th December and Graham Devon will continue to post 10k posts per annum on here. Life goes on, nothing much changes.

midnight_child

MFW_ASAP wrote: »

The confirmation bias is strong with this one....

From your posts you seem to not be asking a general question to gain a balnce of opionions, but looking for confirmation for your view that people are going to really struggle when interest rates climb. Typical 'bear' activity that we have seen on here many, many times over many, many years.

The reality is that outside of obsessive financial discussion forums, people just make do and get on with their lives. If rates rise, people will grumble and then adjust. The sun will still rise in the east and go down in the west, Christmas will continue to occur on the 25th December and Graham Devon will continue to post 10k posts per annum on here. Life goes on, nothing much changes.

I certainly would not regard myself as a having bearish views. I simply wanted to challenge the somewhat sweeping statements of certain posters on this thread, that I found to be misinformed. To give some background I actually work in a University so I think I have a much better idea than most, as to the challenges affecting new graduates and younger people. As part of my role I am sometimes required to be involved in recruitment and know how heavily oversubscribed we are with excellent graduates, for what are poorly paying jobs on short term contracts.


The reason for starting the thread was that I have an interest in the economy/financial matters, but while I have a nodding acquaintance with most concepts I am not an expert. I mostly wanted to hear the views of the more informed people on here as to how badly a rate rise might affect different aspects of the economy.

Any knowledge on what might happen when rates rise would hopefully inform me as to types of investments for my very modest savings and what to steer clear of.
But apparently as everything will be fine I can happy go long on everything (except gold).


MC

CLAPTON

midnight_child wrote: »

Any knowledge on what might happen when rates rise would hopefully inform me as to types of investments for my very modest savings and what to steer clear of.
But apparently as everything will be fine I can happy go long on everything (except gold).


MC

If your main concern was how to benefit from the suffering of others then you should have made that clear.

There will of course be winners and losers (as with all change) although overall it's good news.

What sort of sums are you considering : what is you attitude to risk?

midnight_child

I would not say its my main concern. I find it an intriguing subject as no one has attempted to reverse rates this low before and its mostly a curiosity thing really.


However, as you say there are winners/losers in every change in the market conditions, and as I have only been investing since 2012 (not a full economic cycle), I don't wish to get caught out.


I current have around 6K in shares plus 8-9K as cash savings. I have bought into individual companies that I have DMOR on and I do not have anything invested in funds. Its mostly FTSE but 20-25% is in Aim markets. This may give an indication as to what relative level of risk taking I am happy to take .
It wont ruin me if I lost the lot, but I'd obviously rather not if I can help it.

MFW_ASAP

midnight_child wrote: »

I would not say its my main concern. I find it an intriguing subject as no one has attempted to reverse rates this low before and its mostly a curiosity thing really.


However, as you say there are winners/losers in every change in the market conditions, and as I have only been investing since 2012 (not a full economic cycle), I don't wish to get caught out.


I current have around 6K in shares plus 8-9K as cash savings. I have bought into individual companies that I have DMOR on and I do not have anything invested in funds. Its mostly FTSE but 20-25% is in Aim markets. This may give an indication as to what relative level of risk taking I am happy to take .
It wont ruin me if I lost the lot, but I'd obviously rather not if I can help it.

Perhaps the best board to ask about investment advice is the investment board?

You need to determine why you're investing. If it's a pension, then it'll probably be over a 30 year cycle, and at £6k I'm assuming you're not very far into it. My advice in this instance would be to invest in adventurous funds on a monthly basis and then not look at the pension for 5 years. You'll gain on falls with your monthly investments and over such a long time period, you'll have forgotten about this particular GFC by the time you cash in your pension.

If you're saving for a house and intend to buy within the next 5 years, then you don't really want to be dabbling in shares as there is the obvious risk that you'll lose money over such a short time frame.

There's nothing wrong with asking for opinion to help determine your financial strategy, I've done the same myself on here over the years and it's made (and saved) me a lot of money. About 18 months before the GFC, I agreed with the HPC mob that a housing correction was comng (with the obvious knock on effect to an economy heavily reliant on property). I started up the Mortgage Free in Three thread in the MFW board and myself and a large number of like-minded people blitzed our mortgages. We had to put up with a lot of jibes about it being a 'sub-standard investment strategy', but these vanished when the economy crashed. When the country went into recession, I had paid my mortgage down by £90k and was in a superb position to weather the storm (I had also built up my emergency savings).

I also took notice of the the bears on the investment boards (plus I was working in the City) and moved my pension into Cash. I was safe and sound when Leymans went under and the stock market crashed. I bought back in when the FTSE was about 3500. My pension pot has doubled in size since then.

Once We hit the bottom of the market and a lot of the financially savvy Bears (not to be confused with the Forever Bears like Graham Devon) started buying houses, I sold mine and bought a dream house - maxing out my finances with a 5x salary mortgage and using all of my emeregency savings to pay the legal fees and stamp duty. 5 years later and my mortgage is down to 3x salary and the farm house is half way through its renovation/transformation into an energy efficient home.

I've done extremely well on here from being participating in discussion on the MFW board, the Investment board and even on this board (though it's now a shadow of its former self and so I rarely post here now). Listen to people, take their advice with a pinch of salt, but also be open-minded enough to alter your financial plans.

Thrugelmir

midnight_child wrote: »

I would not say its my main concern. I find it an intriguing subject as no one has attempted to reverse rates this low before and its mostly a curiosity thing really.

Also the concern of the BOE. As the last thing that the BOE want to happen is make house prices volatile. Hence the constant flagging of the fact that rates will rise. Confidence needs to be maintained while slowly interest rates are increased back to more normal levels. Gradual increases will give people time to adjust. New mortgages aren't an issue as affordability is assessed at 7% interest levels. The unknown is the rump of poor lending that was made between 2002 -2007. With many still sitting on interest only deals or letting their property out.