Are your savings safe? article discussion

Stavros_3

MarkyMarkD wrote: »

Poor "advice", Martin.

Anyone investing in NR at 3.75% because of the spurious benefit of 100% government underwriting, as a result of a blog headline, is being severely short-sold. They should invest elsewhere at higher yields.

How is it poor advice? .
The 3.75% 1 yr fixed rate is one of the best fixes around at the moment

MarkyMarkD

Eh?

The self-same blog says that you can get 3.9% at West Brom "but without the same guarantee".

The headline shouldn't be banging on about 3.75%.

stv1x

So there's no chance that when the time comes to sell NR that existing savers would benefit from a continuation of the original understanding of 'government owned therefore government backed' = 100% safe? If the the answer to that question is no then you are absolutely correct to question the validity of promoting further investment into NR.

If there's some fiddling going on with the small print then the Government have a duty to inform investors who plough in with deposits in excess of the £50k limits now.

I mentioned this in a previous thread but the emphasis on 'strictly NO withdrawals for the duration of the bond' has connotations of a serious mugging about to take place!

MarkyMarkD

Exactly.

There is no good reason why any 100% government guarantee SHOULD continue after any sale. It would be even more anti-competitive than the current situation already is.

I don't see that it is even in doubt - nobody is guaranteeing to anyone that NR will always be state-owned, and in fact that Government has very clearly flagged its intention to return it to the private sector asap.

LongTermLurker

stv1x wrote: »

So there's no chance that when the time comes to sell NR that existing savers would benefit from a continuation of the original understanding of 'government owned therefore government backed' = 100% safe? If the the answer to that question is no then you are absolutely correct to question the validity of promoting further investment into NR.

I'd say the answer's "yes" , there's no chance that the Government would give 100% surety to one of many public companies.

If there's some fiddling going on with the small print then the Government have a duty to inform investors who plough in with deposits in excess of the £50k limits now.

I mentioned this in a previous thread but the emphasis on 'strictly NO withdrawals for the duration of the bond' has connotations of a serious mugging about to take place!

I guess that if they market NR as being different to other options, without mentioning the pitfalls (as with all products, it's down to the individual to read and understand the situation), then NR stands to return to stability faster, which in turn allows the Government to drop the state ownership bit, recoup the tax-payer's money (remember the oo-ah?) and become a political wonder :rolleyes:

Just imagine it: "We saved a UK institution from going under, prevented individuals losing their savings and have brought it back to life, making a profit for the UK taxpayer, faster than anyone imagined". Sure politics are going to be at play, but at the end of the day, we (the tax payers) will have less of a long-term burdon and as MMD says, the likelihood of them not preventing the next potential fallout is pretty slim.

erikuhrig

It's much safer to save in UK as government will bail out banks anyway as we recently saw and even though we have to pay tax on savings it's much better than those off shore accounts.

MarkyMarkD

If you are a UK taxpayer, you have to pay tax whether or not that interest is earned in the UK and whether or not tax is deducted.

It is a popular myth that you can avoid tax by investing offshore.

stv1x

LongTermLurker wrote: »

.....as with all products, it's down to the individual to read and understand the situation

If one could, as you put it, 'read and understand the situation' then one wouldn't have to ask the question at all

NR's position could change quite quickly with much speculation going on about dividing the good/bad bits up. Now if you could point me in the right direction to find the definitive answer on what would happen to existing savers who have invested more than £50k then point away.

LongTermLurker

stv1x wrote: »

If one could, as you put it, 'read and understand the situation' then one wouldn't have to ask the question at all

NR's position could change quite quickly with much speculation going on about dividing the good/bad bits up. Now if you could point me in the right direction to find the definitive answer on what would happen to existing savers who have invested more than £50k then point away.

That's not what I meant, sorry. I didn't mean "read" as in reading Ts & Cs - think more "reading between the lines".

The government baled out NR and stated at the time that the intention would be to put NR in a recoverable position, returning it back to private ownership and returning the taxpayers' money, with interest, as soon as possible.

There's nothing definite, but as I "read it", when they let go of NR, it will be a bank like all others, fighting its way for customers, subscribing to the FSCS and being protected by the FSCS limits. We should all assume that there will be no remaining protection over and above that provided to other FSCS member banks and take the appropriate action. Personally, I would have assumed that from the start and not banked on the special protection lasting forever. My decision to go over the limit, then, would be based on my perception of risk.

stv1x

LongTermLurker wrote: »

There's nothing definite, but as I "read it", when they let go of NR, it will be a bank like all others, fighting its way for customers, subscribing to the FSCS and being protected by the FSCS limits. We should all assume that there will be no remaining protection over and above that provided to other FSCS member banks and take the appropriate action. Personally, I would have assumed that from the start and not banked on the special protection lasting forever. My decision to go over the limit, then, would be based on my perception of risk.

Then you believe that 100% protection on funds deposited in NR, as suggested by this site, is potentially incorrect for Fixed Rate Bonds?

Some clarification by MSE on this anomoly would be appreciated which I believe was the point made by MarkyMarkD.