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13-03-2014, 08:07 AM
11

Re: Interest rates to rise..

Originally Posted by Grumblewagon ->
Bruce, when interest rates are so low, it's not worth saving so you might as well spend it and this boosts retail sales figures. Then when your savings are gone you can't spend as much and retail sales fall off again.

So you've got to balance things and encourage people to have enough savings for a 'rainy day', but keep the retail market going.
I'd be happy to get the 6 or 7% that I was getting a few years ago, but even 3 or 4% would be much better than the 1.5 - 2% you get currently.
Sorry that is very muddled thinking. Interest rates merely reflect the cost of money and the rate of inflation. If you want to make money you don't invest in term deposits etc because no matter what the current interest rates the return is just marginally higher than inflation ie the real value of your money stays the same whether the interest rates are 2% or 17% the apparent increase in money is an illusion.

If you want to make 'real' money you look for asset building investments such as shares or property but the higher the return the greater the risk.

If you want to make money on interest rates then you should be investing it overseas eg in Australia where interest rates are 3 to 4% but then you are at the mercy of exchange rates. As I say the higher the return above inflation the greater the risk.
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13-03-2014, 08:49 AM
12

Re: Interest rates to rise..

Yes Bruce, but you don't want to tie ALL your money up in term investments. You need to keep some that you can have instant access to. What is happening currently is that you are virtually paying the bank to keep your money for you.

I would also say that inflation is a prsonal thing - ie. it depends on your circumstances. Do you have a mortgage, do you drink, smoke, have lots of holidays etc..

I have had some success in the past by investing in FTSE linked equity bonds at or near the bottom of the market. The first returned 57% over 5 years and my current ones look like returning 50% nett over 5 years.

I also make all investments in my wife's name to avoid paying tax - Oh dear, is that a high-risk investment !!
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15-03-2014, 09:20 AM
13

Re: Interest rates to rise..

Said this before, WHEN interest rates rise, most buy to let Landlords will go bust, because tenants will not be able to meet the increased rents required to meet the increased mortgage payments, there will then be a glut of repo's on the market which will reduce the market value of every ones properties and a glut of potentially homeless people, just because some folks want an extra couple of quid per thousand on their savings.
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15-03-2014, 09:25 AM
14

Re: Interest rates to rise..

Originally Posted by spitfire ->
Said this before, WHEN interest rates rise, most buy to let Landlords will go bust, because tenants will not be able to meet the increased rents required to meet the increased mortgage payments, there will then be a glut of repo's on the market which will reduce the market value of every ones properties and a glut of potentially homeless people, just because some folks want an extra couple of quid per thousand on their savings.
Yes I can actually imagine that happening, especially as many people in private rentals would traditionally be in council properties protected from the vagaries of the market, and of course we no longer have that option for them.
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15-03-2014, 09:34 AM
15

Re: Interest rates to rise..

Yes, Grumblewagon's OP was full of the usual shortermilsm Imo, if a property is owned, and not mortgaged, it is still subject to the actions of market forces, extra interest (on savings) in the living years will result in reduction of inheritance for future generations, or even in this life reduction of possible capital release.
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15-03-2014, 10:17 AM
16

Re: Interest rates to rise..

Originally Posted by spitfire ->
Said this before, WHEN interest rates rise, most buy to let Landlords will go bust, because tenants will not be able to meet the increased rents required to meet the increased mortgage payments, there will then be a glut of repo's on the market which will reduce the market value of every ones properties and a glut of potentially homeless people, just because some folks want an extra couple of quid per thousand on their savings.
Paul that scenario could result in cheaper properties putting them in the reach of first time buyers and freeing up some social housing for the 'potentially homeless' .

I am not concerned about my property losing value, I am not planning to sell it ever.
I would like my tiny amount of saving (accrued by going without things ) to retain its value with the help of a bit of interest rather than seeing it being whittled away by inflation.
After all someone is making money from my savings by lending it to others.
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15-03-2014, 10:30 AM
17

Re: Interest rates to rise..

Originally Posted by Meg ->
Paul that scenario could result in cheaper properties putting them in the reach of first time buyers and freeing up some social housing for the 'potentially homeless' .

I am not concerned about my property losing value, I am not planning to sell it ever.
I would like my tiny amount of saving (accrued by going without things ) to retain its value with the help of a bit of interest rather than seeing it being whittled away by inflation.
After all someone is making money from my savings by lending it to others.
That's a very generous and admiral sentiment Meg, sadly too many are far too greedy to think that way these days.
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15-03-2014, 11:39 AM
18

Re: Interest rates to rise..

Originally Posted by Grumblewagon ->
I'd be happy to get the 6 or 7% that I was getting a few years ago, but even 3 or 4% would be much better than the 1.5 - 2% you get currently.
I can't even get 1.5% with my bank, I do require 'instant access' 'tho so maybe you've got your money locked in for 12 months or whatever.

The BoE governor has since said that rates will stay low for some time, and my guess is that menas until after the next election.

It took me several years after 2008 for the penny to drop and for me to realise that rates were not going to rise any time soon. Have had to change my money tactics accordingly, take on more risk, to make some use of the little money I have.
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15-03-2014, 11:49 AM
19

Re: Interest rates to rise..

Originally Posted by Grumblewagon ->
I would also say that inflation is a personal thing - ie. it depends on your circumstances. Do you have a mortgage, do you drink, smoke, have lots of holidays etc..
It certainly is and I've been having problems using the national RPI and CPI figures, so I was delighted to find that the ONS* have introduced a Personal Inflation Calculator, if you go on their web site you can enter your personal data and it will calculate your own personal inflation rate.

What I really like about it is that it presents the results in three formats, there's a table for the months you've selected (I usually do Jan - Dec) then there's an interesting 'balloon' type graphic which shows all the input data, and finaly there's a graph which shows your rate relative to the national rate.

Like all these things the accuracy of the output is related to the accuracy of the input, so I try to keep a record of spending on a daily basis, then I don't forget, of course that also means I have to ask Mrs. Losos for her expenses and sometimes that requires the ultimate in diplomacy

* ONS = Office for National Statistics
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15-03-2014, 12:19 PM
20

Re: Interest rates to rise..

Originally Posted by Meg ->

I am not concerned about my property losing value, I am not planning to sell it ever.
I would like my tiny amount of saving (accrued by going without things ) to retain its value with the help of a bit of interest rather than seeing it being whittled away by inflation.
After all someone is making money from my savings by lending it to others.

You touch on a very good point the value of a house has little meaning once it is paid for.

I suppose if you are downsizing or move from a capital city to a property in a cheaper area then you can realise some of the capital growth but generally speaking the value of your house will be the same as the cost of a replacement.
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