Scared of exceeding PSA

phillw

zagfles said:
But it's an illusion. All that interest is only compensating for the loss in value of your capital, and then only partially (if interest is less than inflation).

If you only want to live off the interest, then it doesn't matter what the official inflation figures are.

Of course, if you have to pay for a new boiler or car etc then it can trigger your capital being depleted and end your run. Then you just have to hope that you die before the money runs out.

subjecttocontract

I've been exposed to inflation for years since I started work. When I started, like most, I was exceedingly poor now I'm considered by some as better off.  I certainly feel richer than when I was in my twenties, i have more disposable and irrespective of current inflation I haven't noticed any negative affects. I don't recall doing anything in particular that would have mitigated or avoided inflation over the years......most of the time I wouldn't have given it a thought but here I am better off than I used to be.  Life is a mystery and full of people who probably worry about the wrong things.

zagfles

subjecttocontract said:

I've been exposed to inflation for years since I started work. When I started, like most, I was exceedingly poor now I'm considered by some as better off.  I certainly feel richer than when I was in my twenties, i have more disposable and irrespective of current inflation I haven't noticed any negative affects. I don't recall doing anything in particular that would have mitigated or avoided inflation over the years......most of the time I wouldn't have given it a thought but here I am better off than I used to be.  Life is a mystery and full of people who probably worry about the wrong things.

Are we going all philosophical again 

What was your salary when you were in your 20's?

subjecttocontract

The point I'm making is that I suspect the majority don't give inflation any consideration. They just get on living their lives, making decisions for many reasons that don't include inflation. Inflation is a word in the dictionary, enjoyed by economists and people on internet sites.

zagfles

subjecttocontract said:

The point I'm making is that I suspect the majority don't give inflation any consideration. They just get on living their lives, making decisions for many reasons that don't include inflation.

This is true. Like you probably had pay rises since you were in your 20's, but didn't think about inflation, right? I didn't really when I was earning £1.17 an hour in the early 80's. Never stopped to think I'd starve on that income today. 

Carry on ignoring inflation, it's just a word, enjoyed by economists and internet geeks and has no effect on real people, right?

subjecttocontract

We leave the Government of the day to manage inflation as there is very little the average man can do other than talk about it. Right ?

zagfles

subjecttocontract said:

We leave the Government of the day to manage inflation as there is very little the average man can do other than talk about it. Right ?

It's not about what you can do about inflation. Obviously the "average man" can't influence inflation. Or even the average woman.

It's about how to react to it.

If you're in a job you'll probably get payrises which over the long term keep your wages up with inflation. If they don't your union might suggest strike action, or you might get a better paid job etc.

If you're getting benefits, state pension, or a DB pension, you'll likely get inflation increases. 

Someone else reacts to inflation on your behalf.

But what we're talking about here is savings and interest on savings. Nobody's going to react to inflation for you. Your savings earn interest but your savings are eroded by inflation. You need to understand that, or at least be aware of it, and the extent. It might not be a problem for you. You might not even need the money. But that's not the point. 

The point is it seems some people think "oohh goody I'm making 6% interest how wonderful, how fortunate I am that interest rates have gone up, I'm jumping up and down with joy at this extra money I have", when inflation is more than 6%, so they have made zero, nada, zilch, they have less value in savings than they had last year even if they reinvest all their interest. They have made a loss but they think they've made a profit.

Again, it might not be a problem for some. Maybe some prefer to live under the illusion getting 6% interest when inflation is 7% is a good thing and they're making money. But for those who want to understand and manage their finances when they have money invested in savings account, they should understand and account for inflation.

Alteratively, move to Turkey and get 30% interest. You'll be really joyful then. For a short while...

subjecttocontract

But your not telling me anything I don't already know.
Most of us, at least on this forum, already maximise our returns the best we can.
We have no control over inflation. If you want to worry about it, go ahead but, it's unlikely to improve because you do.

zagfles

subjecttocontract said:

But your not telling me anything I don't already know.
Most of us, at least on this forum, already maximise our returns the best we can.
We have no control over inflation. If you want to worry about it, go ahead but, it's unlikely to improve because you do.

You're really not getting it. 

I'm not "worried". I just account for it. Rather than "the majority" who "don't give inflation any consideration"

subjecttocontract

No, you're right, perhaps I don't get it.
If you 'account' for it, does it help ?
If it helps, how ?