Raising the £35,000 savings guarantee?

KeithEssex_2

moonrakerz wrote: »

I totally agree with dunstonh.

As I said earlier, pension schemes have gone bust, the Government has done very little about it.

If the limit is increased to £100,000, why shouldn't it be £500,000 or a million. The higher the limit the more strain will be put on any system if problems do arise.

Would you rather have 100% of £35,000 or 0% of £100,000 ?

And as for: "the state is clearly taking responsibility for ensuring that the way they manage their affairs is sound" - if you really believe that ..................!!

Agreed. I did say that I thought that they had make a very bad job of trying to do it. My point is that the responsibility is with them to regulate to try and achieve sound practices.

The limit should surely incorporate all of the average savers which it doesn't at present.

Imagine you sell your house and the funds are with a Bank that fails before you buy your new house ? Hardly fair that you should only get £35k back.

Aegis

KeithEssex wrote: »

Imagine you sell your house and the funds are with a Bank that fails before you buy your new house ? Hardly fair that you should only get £35k back.

You could always get an account with a 100% guarantee. At the moment these are available through Northern Rock (temporary) or National Savings and Investments (permanent). The real problem cases are when people want long-term homes with decent growth for a large amount of money. If they're looking for long term homes for their cash, then it's more likely to be worth the hassle of splitting up the money and leaving it in a few good rate accounts, though obviously it would almost invariably be better to invest in the long term than to hold that much in cash.

KeithEssex_2

Aegis wrote: »

You could always get an account with a 100% guarantee. At the moment these are available through Northern Rock (temporary) or National Savings and Investments (permanent). The real problem cases are when people want long-term homes with decent growth for a large amount of money. If they're looking for long term homes for their cash, then it's more likely to be worth the hassle of splitting up the money and leaving it in a few good rate accounts, though obviously it would almost invariably be better to invest in the long term than to hold that much in cash.

I agree with all that you ssay - The trouble is that the NS&I rates are so very poor The extra 1-2% elsewhere can make a huge difference on your income if you have to live off your savings.

A modest increase in the guarantee would make spreading the risk more practical.

Oblivion

Aegis wrote: »

.... though obviously it would almost invariably be better to invest in the long term than to hold that much in cash.

That might have been true a few years ago, but what constitutes a safe investment nowadays? The world-wide stock market has become an unpredictable roller coaster, and the once solid rock of investing in housing is now foundering in quicksand. I can quite understand why people are shunning investments and turning to cash deposits.

Aegis

Oblivion wrote: »

That might have been true a few years ago, but what constitutes a safe investment nowadays? The world-wide stock market has become an unpredictable roller coaster, and the once solid rock of investing in housing is now foundering in quicksand. I can quite understand why people are shunning investments and turning to cash deposits.

There's nothing wrong with the stock markets, they are just a little turbulent at the moment. It means that those who are drip feeding their investments are picking up fantastic deals at the moment. The bedrock of the markets is still perfectly intact, and ongoing growth is still possible.

To emphasise what I mean, in this time of market trouble, I'm sitting on a grand total of 3.1% growth since August last year, with a loss on my 6-month high of about 5% of the total. Hardly amazing growth for 6 months, but still as good as most cash accounts!

Admittedly, I was sitting on some fairly significant losses until recently, but the recent gains in some sectors of my portfolio have helped the whole lot return to form.

Even if you were a total pessimist, you could invest in fixed-interest investments like gilts, corporate bonds and international securities with comparatively little capital risk and a decent income stream even if the capital value changed.

Oblivion

Aegis wrote: »

... and ongoing growth is still possible.

Doesn't have quite the same 'ring of confidence' as a guaranteed rate of say 6.25% for a year in some of the deposit accounts, does it? I wish you well with your investments but I think I'll stick to my cash deposits thank you.

Aegis

Oblivion wrote: »

Doesn't have quite the same 'ring of confidence' as a guaranteed rate of say 6.25% for a year in some of the deposit accounts, does it? I wish you well with your investments but I think I'll stick to my cash deposits thank you.

No worries at all. Can we compare notes in 5 years to see who had the better deal?

Just so you know, I have cash deposits too, but in the long run my opinion is that cash will perform poorly even compared to inflation, let alone diversified investments.

Oblivion

Aegis wrote: »

No worries at all. Can we compare notes in 5 years to see who had the better deal?

quote]

Absolutely, assuming I'm still in the land of the living then, just let me know which railway arch you're living under and I'll visit your cardboard box and we'll compare notes ... all just in fun of course

Aegis

Oblivion wrote: »

No worries at all. Can we compare notes in 5 years to see who had the better deal?

quote]

Absolutely, assuming I'm still in the land of the living then, just let me know which railway arch you're living under and I'll visit your cardboard box and we'll compare notes ... all just in fun of course

Cardboard? Give me some credit, I'll have at least enough to afford a tarp!

dunstonh

Presumably you would apply the same logic to the pension companies - i.e. if one of them went broke you would not want to offer them any compensation for their contributions ?

Around 200,000 people have lost money due to pension failures. A large number when said like that but not when you look at compared to all those with pensions. Plus, many of those fell foul because the lack of regulation or guidelines that allowed mismanagement to happen. Now the pension protection fund is in place, the good pensions are paying for the bad and it has just increased the number of pension schemes that are closing meaning more people lose out in the long run. Finding the cause of the problem is better than trying to fix it after the event.

As financial institutions are regulated by the FSA the state is clearly taking responsibility for ensuring that the way they manage their affairs is sound. We should be able to rely upon this but it would appear that they have done a very poor job over the last few years not to see this coming !

Despite all the problems and the worst liquidity issues for generations, no UK bank has failed. Even NR is solvent.

All of the current "Credit Crunch" debate demonstrates that the average Savers/Investors have very little information available to them on which to base their decisions. Even now the precise exposure to Asset Backed Securities is unclear.

Most of them relied on sky news scaremongering them into drawing their money out. Lets not use experts or financial analysts, lets ask people in the queue their expert opinion and scare more people.

The world-wide stock market has become an unpredictable roller coaster

When? The FTSE fell back around 25% and has since recovered around 13%. Thats par for the course for a normal crash that has occured on average every 5-7 years. A 25% drop is nothing special. The tech stocks crash took the FTSE down 45%.

Stockmarkets have always been volatile in the short term. Nothing has changed there.

I can quite understand why people are shunning investments and turning to cash deposits.

Some of the yields available now are just begging to be purchased. Yields of 9-10% have been seen and there hasnt been a better time to buy certain investments for many a year.

Doesn't have quite the same 'ring of confidence' as a guaranteed rate of say 6.25% for a year in some of the deposit accounts, does it? I wish you well with your investments but I think I'll stick to my cash deposits thank you.

I started investing in 1995 and have averaged 14.9% a year despite much bigger drops in the stockmarket than we saw earlier in the year. Investing and saving should be hand in hand without being top heavy in either. There are also many options between cash and stockmarket and stockmarket is not all one risk level. Investing above your risk profile is a very common error people make but there is no need to live in an underground bunker with a paper bag over your head