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Looking for a 3 year fixed cash ISA +>1.25%

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  • singhini
    singhini Posts: 553 Forumite
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    AnotherJoe wrote: »
    Are you fantastically rich? If no, why not, given you are able to forecast rates 3 years out?

    Did you realise its a near certainty that your money at 1.25% interest will be worth less in three years than you put in?

    A forecast is a forecast not gospel, but rather than leave it to chance I take an active interest in economics and politics and don't like to leave things to chance.

    I've considered the following:

    * Inflation has jumped from -0.1% to 0.9%.
    *MPC don't seem to be verbally supporting a rate rise since Brexit (infact the rate might be cut once more in the next few months). However the UK economy has grown 0.5% in Q3 and is on forecast to remain there at around 0.6% in Q4.
    *Unemployment is at a 11 year low at 4.8%.
    *Wage growth is at 1.7% which is above inflation.
    *Currency fluctuations have mean our imports are more expensive, thus the cost of goods in our shops will increase inflation thus the BOE would need to raise interest rates.

    to answer your questions, yes I am rich. I live in a country where you can walk into anyones home and drink clean water straight from the tap (that's a sign of real wealth in my book). My superficial wealth includes a 5 bed quadruple garage house with a small mortgage I could pay off if I wanted, ive savings 4 times my mortgage and have the following classic cars MB R107, R129, R113 and a W111 Coupe.

    With regards to your second point, if I do nothing i would keep earning 0.75% v's the 1.25% I could be earning. Also Inflation is 0.9% yet I'm investing at 1.25%, so your wrong (however I do think inflation will reach 2.6% over the following years, hence why I don't want a 5 year investment).

    what I don't understand is, if YOUR predicting inflation will rise then you should be agreeing with me that interest rates will rise (otherwise the BOE will not be able to control inflation and keep it at the magic 2%).
  • bigadaj
    bigadaj Posts: 11,531 Forumite
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    You're assuming the boe is independent and apolitical which isn't necessarily the case.

    Notwithstanding the above, the U.K. And the wider world are addicted to the heroin of cheap money, Brexit would have been an ideal excuse to raise interest rates given the fall in the pound, but no rates were cut.

    Much of the population is incredibly sensitive to even a small rise in base rates, with real impacts in mortgages, I can't see any rate rises for some time though it will get interesting if growth is maintained, we get higher inflation and pay rises.
  • singhini
    singhini Posts: 553 Forumite
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    edited 6 December 2016 at 2:50AM
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    bigadaj wrote: »
    You're assuming the boe is independent and apolitical which isn't necessarily the case.

    Notwithstanding the above, the U.K. And the wider world are addicted to the heroin of cheap money, Brexit would have been an ideal excuse to raise interest rates given the fall in the pound, but no rates were cut.

    I agree

    Much of the population is incredibly sensitive to even a small rise in base rates, with real impacts in mortgages, I can't see any rate rises for some time though it will get interesting if growth is maintained, we get higher inflation and pay rises.

    Me neither, but I can see them starting to increase in 3 years time 2019/2020
  • AnotherJoe
    AnotherJoe Posts: 19,622 Forumite
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    So berating someone else for predicting rates.....and then predicting inflation yourself.

    The worlds gone mad.

    I'm not forecasting it myself, I'm relying on the BoEs forecast amd the fact they are targeting 2%

    Different situation entirely. The OP said " I have a feeling rates will rise" not "mark Cagney forecast rates will rise in 2019"
  • AnotherJoe
    AnotherJoe Posts: 19,622 Forumite
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    So berating someone else for predicting rates.....and then predicting inflation yourself.

    The worlds gone mad.

    I'm not forecasting it myself, I'm relying on the BoEs forecast amd the fact they are targeting 2%

    Different situation entirely. The OP said " I have a feeling rates will rise" not "mark Cagney forecast rates will rise in 2019"

    Edit; however I note the OP didn't actual mean "a feeling" but has done some analysis. Fair enough.
  • singhini
    singhini Posts: 553 Forumite
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    Thanks for everyone's help with this, I think ive sorted myself out.

    Going to put the money into Virgin Money 5 year fixed ISA @ 1.51%

    I took into consideration Eco-Miser's comments about potentially closing the ISA if I need to (at the end of three years, the 5 year fixed would work out the same as the 3 year fix @ 1.25% even when you take into consideration the 180 day penalty). So fix for 5 years and review in three years time.

    Thanks to all
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