Prudent savers being punished - reply from governor boe office

coyrls

Please could you post your original letter, so that we can see your reasoned argument and make an assessment of the relevance of the reply?

Glen_Clark

jimjames wrote: »

Investments have done fantastically since 2009 so it's definitely not been bad or destroyed savings culture as you claim.

Yes but the OP is talking about savings, not investments.
Do you have any figures on that?
I'm just going by the baliffs TV programmes like 'Can't Pay we'll take it away.' I can't remember all the statistics presented there, but the gist is that savings are at a record low, credit card debt and and business for baliffs has boomed to a record high

jimjames

Glen_Clark wrote: »

Yes but the OP is talking about savings, not investments.
Do you have any figures on that?
I'm just going by the baliffs TV programmes like 'Can't Pay we'll take it away.' I can't remember all the statistics presented there, but the gist is that savings are at a record low, credit card debt and and business for baliffs has boomed to a record high

The excuse often given is that savings are low because interest rates are low. That just isn't valid. For small pots of savings up to £20k you could get well over 3% interest on them so to me is is just that - an excuse and has no validity. Obviously if you have £200k in cash then you'll struggle to get a decent rate

theEnd

HUMBUG wrote: »

rant to him about destroying savings culture by manipulating interest rates (plus QE) to refinance Banks.

Imho, it is a hypocritical statement saying they "decide for the good of the British people as a whole". They have printed and lent cheap money to Banks

You do realise most of those things were to save the savers, not the borrowers?

bigadaj

theEnd wrote: »

You do realise most of those things were to save the savers, not the borrowers?

I think that would, be save the bankers, don't you?

steampowered

BLB53 wrote: »

Mr Carney and the MPC failed spectacularly to see the crisis coming in 2008

Mark Carney became the BoE governor in 2013.

Yes there is a small minority of people who are clued up on investing and can maintain their income via investments. There are the rich who can pay an adviser to do the same.

However the vast majority of ordinary people are not familiar with this area and understandably regard it as risky so they stick with what they know which is cash savings.

This is simply not true. You absolutely don't need to be an expert to invest. In general the experts rarely do much better than the market as a whole anyway.

Investing is very straightforward. Stock market investments have never been more accessible.

You can very easily buy a balanced investment fund, or perhaps just a tracker fund, through any number of websites or even through your bank (though your bank will probably have higher fees).

Keeping your savings in cash is madness in my view, unless you are likely to need to withdraw that money in the next couple months (e.g. for a house deposit).

Glen_Clark

jimjames wrote: »

The excuse often given is that savings are low because interest rates are low. That just isn't valid. For small pots of savings up to £20k you could get well over 3% interest on them so to me is is just that - an excuse and has no validity. Obviously if you have £200k in cash then you'll struggle to get a decent rate

But if you look beyond Savings and Investments forums like this one you find people who don't have the knowlege etc to get those rates, and don't have the level of savings we have here. But we need people to save instead of relying on the State because thre is nothing in the kitty but a pile of debts.
I can see the argument in keeping interest rates low for short period to avoid mass defaults. But they seem to have got hooked on it to build up more debt. Osborne's short termism like people cashing in their pensions early, and so called 'Help to Buy', has just poured petrol on the fire. There must come a point when lenders will realise, however low interest rates are, that borrowers won't be able to pay them back. Then the Government will fo what Governments always do when they can't pay their debts, they will default through inflation, so savers are screwed even more.

HUMBUG

Here is my original email direct to Mr Carney's email address:

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Dear Mr Carney

I am assuming you know too well that you are punishing the prudent savers in the UK to subsidise the failures of the banks. You continue to print money and offer cheap borrowing to the banks via QE and have basically manipulated interest rates to all time lows.

For a pensioner who may have savings of £100k , they have lost around £4k per year since 2008 which approximates to £28K -£30k lost income.
This is an enormous amount for people who rely solely on the income from their savings

I understand William Hague wrote about the dangers to your continuing failed policies of QE and that there will be a massive revolt against the banks for punishing the majority number of savers while subsidising a minority number of borrowers. That day is fast approaching and I therefore urge you and your team to amend your decisions on interest rates before you destroy the savings culture in this country forever.

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Remember that there are lots of old people who don't have computers or IT skills or have any knowledge of shares and other investment vehicles. Many of them still have their building society passbooks and haven't a clue how to shop around for better deals and probably don't have the energy to even walk 100 yards (like my elderly parents, one of which is blind). Luckily , I try and help them maximise any interest on their savings but other vulnerable people may not be so lucky (to have someone managing their affairs) and they are the most likely to lose out. As I've said before , many people rely on income from their savings and have spent most of their working lives saving for a rainy day or to help their children when they pass on. Whatever your opinion of the BOE and the banks in general , they caused the crisis by basically playing 'roulette' with our money and lost and savers are being punished more than borrowers (that's the bottom line). When QE ends lets hope there is enough money for the banks to lend to companies because without savers , there will be no investment for growth. In fact , Simon Rose warned about Carney's (and his team's) anti saving policy years ago (see below).

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Bank of England governor Mark Carney today admitted that the main driving force of the recovery has been a fall in saving, which has driven an increase in consumer spending.
He hopes this fall in saving will continue to boost spending (just as it did before the financial crash), even though the report expects that those with insufficient savings will have to finance spending through borrowing on credit cards or loans.

(Text removed by MSE Forum Team)

Simon Rose is from the campaign group, Save Our Savers

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BLB53

This is simply not true. You absolutely don't need to be an expert to invest. In general the experts rarely do much better than the market as a whole anyway.

Investing is very straightforward. Stock market investments have never been more accessible.

I agree you don't need to be an expert to invest which begs the questions:
Why less than 5% of the population manage a S&S investment portfolio, and secondly,
Of those that take the plunge, why the majority consistently underperform the index by quite a significant margin (according to Dalbar)

I have read that investing is 10% brain and 90% emotional and I suspect many come unstuck because they are not mentally prepared and unaware of their emotional strengths and weaknesses which combines to produce a poor outcome.

Investing CAN be straight forward and technology has advanced so that investments are more accessible than ever but unfortunately, as a species we have not kept pace and we are hard-wired to continue to make poor decisions.

So the majority of savers who avoid investing because they do not trust themselves to make a good job of it, despite rock bottom returns to their savings are probably making a smart decision.

ColdIron

BLB53 wrote: »

Why less than 5% of the population manage a S&S investment portfolio

Most of the population invest via their pension

Of those that take the plunge, why the majority consistently underperform the index by quite a significant margin (according to Dalbar)

I would dispute that but if true this is a problem that would appear to be solved by using said index

I have read that investing is 10% brain and 90% emotional

You have been badly misinformed

as a species we have not kept pace and we are hard-wired to continue to make poor decisions.

Another problem that could be easily solved by removing the decision making process by using an index tracker perhaps?

So the majority of savers who avoid investing because they do not trust themselves to make a good job of it, despite rock bottom returns to their savings are probably making a smart decision.

Except the ones that invested with a pension of course. I don't think it would be a smart decision to rely on cash savings for anything other than short term objectives

Just another point of view