Trend from Passive funds to Bank accounts

mears1

The threads on this forum have noticeably moved from discussing passive funds to bank Fixed rate savings and Regular savings accounts, even though the interest rates are not more than inflation. Why is this? Or is it just a trend of the retired/soon to retire posters? 

My passive funds and CGT/CG absolute fund are performing dismally!

InvesterJones

I think it's more about the rate of change - nothing new has happened in passive (index?) funds, whereas new savings rates are coming out almost daily - resulting in an increase in news sharing and information gathering.

ChilliBob

It's also perhaps due to people's predictions about global passive funds... 

Quite a few people seem to feel the US is overvalued and hence may not do so well over the next decade. 

Returns forecasts from Vanguard et al make fixed savings look more attractive. 

Obviously nobody knows, but people do know with fixed rates. Essentially the 'risk free' rate has changed, so people probably feel they need to be compensated more than they were when rates were almost zero, for taking risk 

poppy10_2

Yeah, Vanguard's estimated average returns over the next ten years are 4.5-6.5% for UK shares, around a percentage point higher for global shares. Makes it less attractive when you can earn 6% pretty much risk-free in a fixed rate saving account

Bigwheels1111

I know nothing about passive funds or investing of any kind.

But watching youtube about new and second had cars I have seen the future.

Cars were over priced due to Covid, shortages and dealers adding 30k,40k over MSRP.

Banks did not check if people could afford the loans, Wait a minute was it not mortgages last time anyway.

Banks lent 150% of the cars value.

I wonder what will come next. Already going on now.

Defaults, repo's market crash and banking crash.

Lets all invest in the USA.

I will keep my fixed rates savings.

I dont like the risks involved.

boingy

I'm currently increasing my passive funds but, as someone else said, the buzz about cash and interest rates is because they are on the move and we all need cash handy for short and medium term things. It's not a case of beating inflation but of not losing as much to it.

Sg28

Passive funds aren't beating inflation either. When you can earn 6% guaranteed why take the risk hoping to just slightly more? 

enthusiasticsaver

I invest in managed active funds which are not doing great but better than passive.  My view is that people view the better cash savings rates as a way of doing better than passive with no risk to capital.  I personally invest/save in relation to how accessible the money needs to be in the hope eventually we will climb out of this downturn and investing when the market is low is a good thing. If I  don't need to access it then I am not too worried if it is not performing great at that particular time.  That is investing for you. You look to the long term. 

Albermarle

mears1 said:

The threads on this forum have noticeably moved from discussing passive funds to bank Fixed rate savings and Regular savings accounts, even though the interest rates are not more than inflation. Why is this? Or is it just a trend of the retired/soon to retire posters? 

My passive funds and CGT/CG absolute fund are performing dismally!

Quite possibly in 6/9 months time, inflation will have dropped below the 5/6% you can get now on fixed term savings.

On the other hand of course, markets could also have picked up and be up a lot more than 5% ( maybe).

Also there is the scenario where your fixed term savings finishes in say 3 years but the rates on offer then have dropped right back if you want to renew. So do you then buy back into passive funds at potentially a significantly higher price than when you sold ( of course it could be a lower price so you would be quids in )
Unfortunately without a crystal ball it is difficult to know what to do.  

cloud_dog

mears1 said:

The threads on this forum have noticeably moved from discussing passive funds to bank Fixed rate savings and Regular savings accounts, even though the interest rates are not more than inflation. Why is this? Or is it just a trend of the retired/soon to retire posters? 

My passive funds and CGT/CG absolute fund are performing dismally!

I think it may have also arisen due to these types of interest related products now offering 'something', whereas previously they offered virtually zero and so people had to utilise more risk based assets in order to achieve at least some return on their money.  

A lot of the commentary I have read has been more focussed on using these vehicles, including SONIA tracking funds, where the money is aimed at shorter term needs, possibly de-risking risk based asset exposure.  So, yes there has been an uptick but I would suggest not as a direct replacement for the value of investing in risk based assets for the longer term.

boingy

I'm actually quite optimistic about the markets in the next year or two. I've shifted slightly away from UK funds towards global funds but only slightly.
But I am also enjoying bouncing money around savings accounts chasing the rabbit. I'll probably fix some of it later this year.