Forum Topic

All our so called savings

Some of us have savings - we have saved all our lives- now the going rate has gone down to 0.01 percent- banks did this a long time ago but this has happened to other places -  this is thieving- I wonder what next - always been told that they were 100 percent safe - I wonder if that is true-  Feeling very unsafe now- I think we are all feeling this who have saved all our lives.

Helen Bamberger ● 2226d34 Comments

Have you lost money saving ? In most cases you have to take a slight risk to get a return one can shout about. Nothing called free money on top of earnings or savigs. Many have no money to save whatsoever.

Julian Pavey ● 2226d

Savers have been subsidising the financial system for a very long time. Unfortunately the model for the modern economy can be summarised as "buy stuff you don't need with money you don't have". Much better to be a borrower than a lender in today's world and unfortunately one of the biggest borrowers around is the government. They simply have to keep interest rates at rock bottom and of course despite its supposed independence the Bank of England seems all to willing to oblige. The latest slashing of interest rates by NS&I demonstrates just how desperate things have become. It's only a matter of weeks since NS&I reversed a decision to cut interest rates "to support savers at this difficult time". This was in fact in order to attract more savers' money to help the government's massive borrowing requirements. Having pulled in more than £14.5b from savers in the last few months NS&I have now announced cuts far harsher than originally planned. It is a pretty despicable move. Many older people have their savings invested in these products and now that the interest rate is effectively zero, they will have no option but to start eating into the capital. The calculation now is  about how long we can afford to live before the money runs out.

Bruce Hammal ● 2226d

Julian I agree that so many people have no savings - just look at the numbers sleeping in doorways - horrendous- but why should people who have saved all their lives be penalised to such a degree -  I havn't seen anyone who supposedly is 'looking after us' take a wage  cut- in fact I see that most of our past prime ministers etc.etc.are now making a fortune .Us savers have done all we can to make us ,when we age ,, feel safe.Just a thought-  and all I firstly asked the forum was - are we safe ?

Helen Bamberger ● 2226d

Rest assured. Providing you're saving with a UK registered institution the following applies quoteAll UK-regulated current or savings accounts and cash ISAs in banks, building societies and credit unions are covered by the Financial Services Compensation Scheme (FSCS). ... So if the bank fails, you'd get back up to £85,000 per person, unquoteHowever. The reason UK interest rates are so low is simply because most banks and BS's no longer impose charges on personal accounts, and they need to cover their costs which were previously hiddenThe reason some foreign banks are going into negativeinterest is a combination of this and the fact that their currencies are strong and so they can attractforeign investors and charge them for the priviledge,As it is, the biggest worry at the moment is inflationfor which to the ordinary person not willing to gambleon foreign currencies, there's no easy fix,michael adams...

Michael Adams ● 2226d

NS&I savings and investments are backed by HM Treasury, which means any money (not the £85000 FSCS limit) you invest with them is 100% safe.

Mark Perry ● 2226d

Thanks Mark - all safe until it’s not !

Helen Bamberger ● 2226d

NatWest have just released an account that offers 3% pa.  Maximum payments in, £50 a month.  It's not great but compared to much of the competition it's okay.

Alastair Banton ● 2226d

There is an Arab bank in Portman Square that has a sign in the window:        SAFEST BANK IN THE MIDDLE EASTI am not sure their ad agency had properly thought that through somehow.The way I interpret that is, banks in the region are unsafe but you have a better chance with us of not losing your shirt.😬

Adrian Irving ● 2226d

If, as Michael points out, your money is in a regulated financial institution, then your capital up to that level is safe but the value after inflation is not. Even with current low inflation the value of your savings will be whittled away. It would be wise to decide if any of your savings can be set aside for 5 years or more and assess whether to invest in unit trusts, investment trusts or elsewhere if your savings are sufficient.

James Petri ● 2225d

The reason why the BoE has guided interest rates so low is to a) try to stimulate the economy and b) to reduce interest rate cost for borrowers (eg local businesses). If the BoE hadn't reduced interest rates, while our global competitors did, then The £ would appreciate — bad for our exporters, bad for inflation (we are a net importer). 
If banks start lending money very cheaply (low interest rates) but don't reduce their own borrowing rates (ie savings rates) at the same time, then given rising default rates of borrowers — they banks start losing money. Their capital buffers will erode. This makes it harder for them to make more loans etc etc. You remember what happens when banks start losing lots of money right? Do you think it would be responsible for banks to borrow (ie from savers) at uneconomic levels and take more risk?ink What do you think should be done, as it's not as simple as just saying banks are thieves? 

Rob Reynolds ● 2225d

We’re all told to save. But the government doesn’t.  Even before Covid the national debt had doubled in the last ten years from one to two trillion. And that’s with Cameron’s austerity measures.

Stewart Jones ● 2225d

At the moment, you're being told to spend...

Rob Reynolds ● 2225d

No one I know is spending if they can help it, just on absolute essentials. No one knows what the future holds.  Hopefully next year will be better but it's only sensible to hang on to your money until you see how the land lies, even with derisory interest rates.  Marcus has just reduced from 1% to 70% and others have gone down too so I will have to move some money to the best rate I can find between savings and cash ISAs.  It's a question of constant switching at the moment.  The only spending I may do is paying off a bit more of the mortgage but not sure if that's such a good idea right now.

Claire Moran ● 2225d

RobShouldn't that be if "BoE hadn't reduced interest rates, ...£ would" depreciate? (not appreciate)

Mike Chisholm ● 2225d

No. If the BoE held interest rates unchanged, while the other large economies reduced interest rates then it makes UK/GBP rates more attractive on a relative value basis to foreign investors. Simplistically, they would sell their US Treasuries/liquidate their JPM savings — sell their USD and buy GBP to put cash into UK Gilts / RBS savings accounts. Selling $, buying £ makes the £ appreciate. 

Rob Reynolds ● 2225d

"..it's only sensible to hang on to your money until you see how the land lies."For some people that is indeed sensible. But for others it could be a bad decision. It partially depends on one's personnal financial position and aversion to risk. Money that you know you will not need for a period of time might well be better in a balanced fund or portfolio of shares than in an interest bearing account giving low or zero rates of interest. Buying these when the price is low and selling high is obviously a good strategy. There have recently been some huge drops and this gave a suitable opportunity to buy. Traditionally not for orphans and widows but for others even a relative small sum will get you into a unit trust. It's worth investigating if years to come of low interest bearing accounts seems depressing.

James Petri ● 2225d

There's talk at the moment of going into 'negative equity'. Does this mean that if you have money in a savings account you will actually be charged money to keep it there? If that happens, the underside of the mattress will become a preferable option.

Colin Jordan ● 2225d

'Traditionally not for orphans and widows'I'm both and very comfortable investing, though via investment trusts rather than unit trusts.

Susan Kelly ● 2225d

Negative equity is something else - usually applied to a property whose value has become less than the amount borrowed on it. Negative interest rates are indeed when effectively an investor is charged for the privilege of keeping money with an institution. Usually this is at government level and happens when the security of the investment is valued above the return on it. Switzerland is one country where this has happened. I'm not aware of any retail savings institutions ever actually doing this in living memory but we are indeed in extraordinary times!

Bruce Hammal ● 2225d

Here is pretty much all anyone needs to know about negative interest rates.https://www.bbc.co.uk/news/business-52772950

Bruce Hammal ● 2225d

Thanks for the correction, Bruce. I of course meant 'negative interest rates (I blame Sunday morning brain fog).

Colin Jordan ● 2225d

The whole thing is a filthy con. Designed by the wealthy and screwed by the wealthy and there’s a lot of wealth and wealthy people in Chiswick who probably don’t even care what happens to a few thousand off their savings to prop up their wealthier gods.

c james ● 2225d

At least cash in bank will be safe.  If your savings are in stocks & shares you are probably looking at a c.15% decline in value since start of year.  This may or may not be a temporary loss depending on how long you can avoid having to cash in the sharesHowever, there is also an upside.  During lock down I have found I am spending at least a 1/3rd less per month than I normally do

Justin Stephenson ● 2225d

Certainly cheaper eating at home.

Janice Evans ● 2225d

Like so many things we used to take for granted, the old financial models are broken. Once many people were fortunate enough to be in final salary pension schemes where all the investment decisions were made for them and they could look forward to retiring on two thirds of their last pay - usually inflation-linked too. Lovely! Then came deregulation, personal pensions, SIPPs, etc which made those investment decisions the job of the investor - usually managed with the help of a financial advisor who was supposedly "independent" but often  turned out to be putting clients' business the way of whichever institutions would pay the biggest commissions. At some point pensions became very lucrative for the financial services industry - and pretty risky for the investors. It turned out very little was safe - two words illustrate that - Equitable Life. In this risky world the accepted advice for people approaching retirement with personal pension pots to safeguard was to move out of equities and into rock-solid minimum-risk investments, usually cash deposits of one form or another. This worked well enough because historically you could expect to be getting on average about 5% return on your deposit. That came to a shuddering halt with the financial crisis of 2008, quantitative easing etc.Now money is worth practically nothing in investment terms, meaning that savings no longer really qualify as investments. Anyone relying on savings interest is now absolutely stuffed. On the other hand, walking past a car dealership the other day I noticed that they were offering credit ....at 9.9%

Bruce Hammal ● 2225d

'If your savings are in stocks & shares you are probably looking at a c.15% decline in value since start of year.'True, but following several years of gains. I do feel for anyone who plunged in at the start of the year. Talk about bad timing.

Susan Kelly ● 2225d

And that is why the stock market is essentially for gamblers. Equities are always recommended as the best form of long-term investment - the ten year return is always  touted as the time span on which to judge them. The trouble is which ten years to measure? Just a day's difference at either end can give very different results. Frankly I am amazed by people who have money in shares at this extraordinarily volatile time. The outlook for the world's economies is unpredictable to say the least. Buying low and selling high is really hard to do. The old adage holds good, now more than ever - don't bet more than you can afford to lose.

Bruce Hammal ● 2225d

"Equities are always touted as the best form of long-term investment..."I agree with you, as long as it is a balanced portfolio. To pick a single share is a gamble. Everyone employed in a company is aiming to be successful whereas the little white ball on the roulette table couldn't care less where it ends up: that's real gambling. Almost everyone who put money into the stock market 6 months ago will be quids in as the rises since have been so good. Isn't hindsight wonderful :(

James Petri ● 2225d

The markets have defied all logic in recent months. Normally anyone  with any common sense would steer well clear. However I think the truly dreadful returns offered (especially to pension funds) for cash deposits has forced many to stay invested when normally they would have got out and this has kept the indices artificially high. How things will go from now is frankly anyone's guess - Covid and the full force of Brexit will certainly guarantee choppy waters ahead for UK stocks. Globally there's Trump to worry about, and Putin, and the Korean situation. China continues to flex its muscles, India  and Pakistan are in a constant stand-off, the middle-east rumbles on, then of course there's global warming.....you get the picture.But hey - look at the numbers as the Donald would tell you. And keep your fingers crossed folks.

Bruce Hammal ● 2225d

For anyone interested, this is worth reading.https://apple.news/AItsUki2iS2ixUgoAG9olAQ

Bruce Hammal ● 2225d

Ignore that - the link won't display properly. Apologies.

Bruce Hammal ● 2225d

There we go, global warming blame is a pile of dogs doo. Global warming is a natural demise of all life including planets and this planet is no exception  nothing to do with the V8 chucking out muscle power fumes. And again Trump has done more for American’s than that previous bloke who sold America out to the world inc a billion dollars cash to Iran.

c james ● 2225d

'the stock market is essentially for gamblers.'Extraordinary the number of people who come out with this sort of thing, as if it equated to putting your savings on the 2:15 from Doncaster. You build up a diversified portfolio, preferably a bit at a time, ride out the falls and don't invest any money that you might need in a hurry.

Susan Kelly ● 2225d

Money comes to money. If your savings are just what you have managed to put into your china piggy bank then it is not going to grow.

Vivienne Cox ● 2224d