Punished for doing the right thing!

[R3verse Swing]

OK this is a bit of a rant - related to users from UK & possibly USA/Europe.

I was taught to save money, and I do, but in the last 10 years, since FC08, my savings account is earning me a measly – wait for this – 0.20%. My cash ISA, a whopping 1%!

Both percentages are way below the 2.6% inflation rate, which means I am losing about 2% value on my savings each year!

I am not the only one. Millions of savers are complaining in the UK and taking the hit!

It gets worse, with a low interest rate, the private pension annuity is also a joke! Meaning, for every £100000, I will receive around £1500 a YEAR! A YEAR! My state pension will come in higher at around £165 a week!
Anyone else feeling enraged for doing the right thing with money?

Naturally the government wants me to invest in equities etc but I will not fall for their honey trap!

What to do? Let my saving/value erode, or just hope for the best!?

Arrrrrggghhhhh!

Interest rate rise in doubt as inflation falls and wages grow

The squeeze on households is easing, according to official figures that show prices rising at their slowest pace in a year.

The slowdown in the rate of inflation, at a time when wage growth in accelerating, has raised questions about whether the Bank of England will commit to raising interest rates next month. That, in turn, caused the pound to slip against the dollar yesterday.

The consumer prices index, the headline measure of inflation, showed that prices had risen by 2.5 per cent in March. Analysts had expected the rate of inflation to remain unchanged from February’s rate of 2.7 per cent.

https://www.thetimes.co.uk/edition/...t-as-inflation-falls-and-wages-grow-sl0kwvzmn

 

[JaDed]

You want interest rate?

 

[Syed1]

You want interest rate?

Checkmate

 

[Syed1]

In Canada we have a government sponsored tax free savings account which gets you around 2-5% annual returns depending how much you have saved in it.... There also a limit to how much you can put in it annually. Also any earnings on investments made through the tax free savings account are as you guessed it, tax free.


Canada yet again proving that it is well and truly the best country known to mankind.

 

[emm-tee]

In Canada we have a government sponsored tax free savings account which gets you around 2-5% annual returns depending how much you have saved in it.... There also a limit to how much you can put in it annually. Also any earnings on investments made through the tax free savings account are as you guessed it, tax free.


Canada yet again proving that it is well and truly the best country known to mankind.

Everything is correct but that 2-5% is incorrect as it depends entirely on the type of investment vehicle you choose to put the money in.

It can go anywhere from 0.5% to potentially no ceiling as you can invest that money in stocks or whatever else you like.

 

[James]

I agree, it is very frustrating.

At the moment I think property is a good investment, i.e. overpay on our mortgages to outright own our main home quicker so we can then acquire a second property in future (with or without a mortgage), as a fixed term tenancy or as a holiday home both of which could be a goldmine over the years.

You can buy chalet bungalows in busy holiday parks for around £30k cash which for the weekly use of you can charge £250-£700+ dependent on seasonal trends, own one of these for even 15 years before selling it on and you would make a bomb I reckon.

Property in my opinion will overall keep its value over time or somewhat increase in value, unlike everything else at the moment which is a futile exercise.

For example the better savings accounts out there at the moment offer around 3% gross interest over a maximum 12-month term and have paltry annual caps on them, moreover you often have to pay a fee for that bank’s “special packaged account” to even have access to the best rates in the first place, so you can end up getting 8 grand in there across 12 standing orders and then receiving like 160 quid interest at the end of it. Rubbish!!

So yeah. Back to ye olde bricks and mortar it is.

 

[srh]

In Canada we have a government sponsored tax free savings account which gets you around 2-5% annual returns depending how much you have saved in it.... There also a limit to how much you can put in it annually. Also any earnings on investments made through the tax free savings account are as you guessed it, tax free.


Canada yet again proving that it is well and truly the best country known to mankind.

what a load of ** you are sounding like government pays you 2-5% annual returns on this savings account (RRSP) which is not true

 

[Robert]

My pension fund shot up last year. But I chose an aggressive strategy so I am running the risk that it could go down.

On the ISA front you might as well just spend it as inflation means you actually lose value. I keep one as a reserve in case I lose my job.

 

[GenericBrand]

Lol @ 2-5%

 

[Syed1]

what a load of ** you are sounding like government pays you 2-5% annual returns on this savings account (RRSP) which is not true

I was mistaken.... it is minimum of 0.5% and there is no upper limit, since you can use the account for un-taxed investments.

 

[emm-tee]

I was mistaken.... it is minimum of 0.5% and there is no upper limit, since you can use the account for un-taxed investments.

What I said

 

[Slog]

You of all people are fine with interest and want more of it?

Also... Why not just invest in mutual funds? They are relatively risk free and give a decent return depending on the market. And you don't have to actively manage a portfolio

 

[Bosanquet]

OK this is a bit of a rant - related to users from UK & possibly USA/Europe.

I was taught to save money, and I do, but in the last 10 years, since FC08, my savings account is earning me a measly – wait for this – 0.20%. My cash ISA, a whopping 1%!

Both percentages are way below the 2.6% inflation rate, which means I am losing about 2% value on my savings each year!

I am not the only one. Millions of savers are complaining in the UK and taking the hit!

It gets worse, with a low interest rate, the private pension annuity is also a joke! Meaning, for every £100000, I will receive around £1500 a YEAR! A YEAR! My state pension will come in higher at around £165 a week!
Anyone else feeling enraged for doing the right thing with money?

Naturally the government wants me to invest in equities etc but I will not fall for their honey trap!

What to do? Let my saving/value erode, or just hope for the best!?

Arrrrrggghhhhh!

There is absolutely no way to increase your savings through bank deposits in UK - as you have discovered. I'm afraid the only way that you are going to beat inflation is via stock market investments and/or property. I have done both and only have a miniscule proportion of my money (5%) in cash for emergencies. If the amount you wish to invest does not justify the services of an IFA - there are investment funds available online which charge fairly low fees. But research their track records & talk to friends who invest.
Re property - I have to say that we have prospered in our property purchases over the past 20 years but I am in the process of selling my last property here. I fear that the market will fall sharply after the disaster that is coming next year. I will rent an apartment till next spring & re-enter the market in summer 2019 (or later).
Good luck.

 

[Bosanquet]

Oh and one other thing. You must shop around for private pension annuities. You should be able to achieve £3000 per year per £100,000 easily. Don't just accept what your current provider is saying. Use one of the online comparison sites. You will be surprised (pleasantly, for a change).
Go for it.

 

[Varun]

Equities are the way to go, especially if you have time on your side.

 

[Adijazz1706]

You of all people are fine with interest and want more of it?

Also... Why not just invest in mutual funds? They are relatively risk free and give a decent return depending on the market. And you don't have to actively manage a portfolio

Riab is interest on value, not quantity

 

[R3verse Swing]

There is absolutely no way to increase your savings through bank deposits in UK - as you have discovered. I'm afraid the only way that you are going to beat inflation is via stock market investments and/or property. I have done both and only have a miniscule proportion of my money (5%) in cash for emergencies. If the amount you wish to invest does not justify the services of an IFA - there are investment funds available online which charge fairly low fees. But research their track records & talk to friends who invest.

Re property - I have to say that we have prospered in our property purchases over the past 20 years but I am in the process of selling my last property here. I fear that the market will fall sharply after the disaster that is coming next year. I will rent an apartment till next spring & re-enter the market in summer 2019 (or later).
Good luck.

I’m 25% Precious metals, 50% cash, and 25% Thematic investments. The Thematic investments are aggressive risk, and have performed incredibly well, better than property, index linked funds, and equity markets, in terms of percentage returns. Precious metals are fantastic when there’s bad news like war, so a great insurance policy and wealth preservation.

It just my pile of cash is losing value. I'm not going to buy a property as the market is prime for a crash, and has been in decline anyway, plus I do not want to saddle myself in debt with Brexit on the horizon too. Forget about buying shares, as the market us due a crash anyway and the FTSE market is the biggest joke anyway!

I have used other tricks in the book. Like private pension tax relief and maximizing my children’s saving accounts (which earn 3%).

I was hoping the BoE would raise rates this May, which would convince me to keep the money in the bank, but the state of the UK economy means it cannot handle even a .25% rise!

This means I may have to plough more into metals, which will hedge myself against a drop on GBP, but as far as equities go, the market is overbought and one more missile strike in ME, would result in a plunge!

God I miss the days of 5% rates in the UK!

 

[R3verse Swing]

Oh and one other thing. You must shop around for private pension annuities. You should be able to achieve £3000 per year per £100,000 easily. Don't just accept what your current provider is saying. Use one of the online comparison sites. You will be surprised (pleasantly, for a change).
Go for it.

For sure, I still have a long way to go - a few decades, but I also remember when BoE said the rate cuts would be for a few months (in 2008) rather than a decade! So I am envisaging low rates for the rest of my working career!

 

[Kroll]

Riab is interest on value, not quantity

Riba is Riba, don't think there is a way around it.

 

[JaDed]

Punishment will come from above for the greed of interest.

 

[R3verse Swing]

Punishment will come from above for the greed of interest.

Don't confuse interest on store of value, with usury.

Also please stop trying to convert each thread into a God/Religion session because your have many unanswered questions, ala, doubt! Start a dedicated thread instead!

 

[JaDed]

Don't confuse interest on store of value, with usury.

Also please stop trying to convert each thread into a God/Religion session because your have many unanswered questions, ala, doubt! Start a dedicated thread instead!

I respect the convenient truth ,welcome to the world, am sure you would figure out excuses for other real world requirements as well.

 

[James]

Hard-working people, who earn their money every month to support their families, investing their very limited disposable income and getting subsequent financial rewards for good research and good judgment, yeah terrible immoral idea that is.

 

[R3verse Swing]

Hard-working people, who earn their money every month to support their families, investing their very limited disposable income and getting subsequent financial rewards for good research and good judgment, yeah terrible immoral idea that is.

Totally terrible! You may as well ask why we have brains!

 

[Bosanquet]

For sure, I still have a long way to go - a few decades, but I also remember when BoE said the rate cuts would be for a few months (in 2008) rather than a decade! So I am envisaging low rates for the rest of my working career!

I was just researching private pensions out of curiosity - my wife and I will both eventually get good public sector (BBC & NHS) final salary pensions when we retire. I entered my own data & asked for annuities from age 60. I was quite surprised at being quoted £3974 per year for 100K invested. Not a lot but better than what I was expecting to see.
As stated earlier, we are selling our home & taking the gains of the past 10 years. Then renting for a while. I am not a personally "active" investor; I follow advise on my investments from professionals.
As for precious metals - I really must get my wife's "precious metals" valued one of these days. She is of bengali origin and the amount of these precious metals she has casually lying around the bedroom worries me. I keep telling her to sell just half and go for a total blow-out 3 month round-the-world trip. But she won't let me!

 

[Adijazz1706]

Riba is Riba, don't think there is a way around it.

Riba is on value, it is permissible to give 100 gold coins of 10 gm each in return of 50 gold coins of 20 gm each