QE - killing interest rates for prudent savers.

[Gunk]

I’ve made more on my classic Fireblade over the last couple of years than my cash ISA. Even after expenses I’ve calculated it at around 7% per annum tax free

 

[MarkF]

I doubt many people with market-dependent investments are going to be celebrating this year. My recently made pension AVC's are currently slightly underwater, but I focus on the fact that making those contributions saved me a chunk of tax. I'm not about to retire imminently, so I can ride it out.
The thing is about paper losses on valuation statements are they are just that - a theoretical amount by which you are less well off. It only becomes a real loss if you actually cash in an asset that's underwater, or start receiving a pension relying on an underperforming asset to generate it's income. If you sit on your hands and do nothing, the values of investments do generally recover and actually grow. Panic selling in an adverse market just crystallizes your loss and makes it real.

The pensions and share stuff can sit, it's the spare "What if"? cash in the bank that we are going to blow.

 

[HMS_Dave]

You could spend 5 figures on a racing bike and post videos of your swearing at motorist and riding at stupid speeds on shared paths.

Just saying...

 

[johnblack]

My pension has weather the last 6 months fairly well, far better than I expected. Fixed terms with NSandI, Yorkshire and Investec are coming to an end so I'm in the same boat at the minute, think the first thing I'm going to do is further increase my monthly salary deducted pension contributions and supplement bank account with some of the current savings as it's the most tax efficient and probably best return. Got to look in to what I do with the rest, I'm not that keen on stocks and shares, really should look in to it but just don't have the energy.

 

[vickster]

I closed my shares ISA when the sh** hit the fan in March - probably unwise but it had plumetted, had more in it than I was comfortable with and was a higher risk plan than I wanted.

I topped up PBs to the max, stuck some in a cash ISA (before the interest rate went down again) and popped a chunk in a Vanguard shares ISA plan (as suggested by a CCer)and then more when another fixed cash ISA matured (a lower risk one). It's on about a 7% return right now since late April which is ok and a lower risk than I had (and tax free ).

More will be going in my pension which did look a bit sad in late March but has perked up a bit I think!

My company will need to pay me a fairly chunky dividend once my tax return is done so I'll need to decide what to do with that at some point! (usually I'd have an exotic holiday but those aren't on my wish list right now )

I might get an extension built! Or try some stem cells in my fooked knee

It's all rather grown up stuff

 

[SpokeyDokey]

I've done some research on the Sharia a/c's and all looks well with them.

BLME have a 1.7% 7 year lock which will do us for now as we are very pessimistic about future rates - we intend to put 85% of available funds into this and the 15% balance into an actively managed stocks & shares ISA with an ongoing monthly drip into it.

Not sure what fund to go for yet - more research!

 

[Chris S]

Most other deals are <1% excluding some 'Sharia' FRB deals that I don't particularly want to invest in.

I've got a Sharia-compliant investment. If they can't pay the 'expected profit' they pay it on your money up to the current date and then give you the option of either having your money back or leaving it invested at a lower 'expected profit' rate.

By the way, some people have predicted negative interest rates so anything above zero might be a good deal!

 

[SkipdiverJohn]

The only problem with really long term fixed rate savings bonds is you are trapped in them, possibly to your detriment, if rates go up, or inflation does. When you could get north of 6% interest on cash savings fixed for 5 years I used to do them, staggering the maturity dates and rolling them over as they matured. Now, the longest I have anything fixed for is 18 months @ 2.1% in a Sharia account, and in all likelihood I'll put more in equities and hold less cash as my existing fixed term cash accounts mature. I don't intend to suffer sub-inflation returns if I can help it.

 

[SpokeyDokey]

I've got a Sharia-compliant investment. If they can't pay the 'expected profit' they pay it on your money up to the current date and then give you the option of either having your money back or leaving it invested at a lower 'expected profit' rate.

By the way, some people have predicted negative interest rates so anything above zero might be a good deal!

Yes - I did quite a bit of research on the methodology by which they operate and that was one of the attractions to me.

 

[SpokeyDokey]

The only problem with really long term fixed rate savings bonds is you are trapped in them, possibly to your detriment, if rates go up, or inflation does. When you could get north of 6% interest on cash savings fixed for 5 years I used to do them, staggering the maturity dates and rolling them over as they matured. Now, the longest I have anything fixed for is 18 months @ 2.1% in a Sharia account, and in all likelihood I'll put more in equities and hold less cash as my existing fixed term cash accounts mature. I don't intend to suffer sub-inflation returns if I can help it.

We are a bit risk adverse tbh and have a small percentage of our total savings pot exposed to market vagaries via an Aviva personal pension pot that has done remarkably well over the years it has been running.

We will be dipping our toe in the water again as I said above - not sure what to do yet though in terms of actual funds to invest in.

Not bothered about the long tie-ups on FRB's tbh, they currently comprise around 40% of total savings and tbh it is highly unlikely that we will ever get to spend the last 80% of our savings in our lifetimes let alone the last 40%. I guess that sounds bleak but that's the reality for us.

 

[vickster]

Not bothered about the long tie-ups on FRB's tbh, they currently comprise around 40% of total savings and tbh it is highly unlikely that we will ever get to spend the last 80% of our savings in our lifetimes let alone the last 40%. I guess that sounds bleak but that's the reality for us.

You’re not trying hard enough

...or you’re a billionaire

 

[chris-suffolk]

With low interest rates, holding cash in ISA's is pretty pointless since you'd have to have a hell of a cash pile earning sub 1% in order to breach your £1k tax free personal savings allowance outside an ISA.

One reason for keeping an ISA is because you don't want interest payments being counted in income calculations - such as student loans. There will no doubt be others. With student finance taking £1 for every £7 earned, it effectively makes the interest rate much higher (about 15% in effect)

 

[Moodyman]

By the way, some people have predicted negative interest rates so anything above zero inflation might be a good deal!

Corrected for you.

 

[Chris S]

Negative interest rates would result in the bank giving you back less money than you had put in.

 

[chris-suffolk]

Negative interest rates would result in the bank giving you back less money than you had put in.

So far as I'm aware (and stand to be corrected) this has only ever been done (by any country) to corporations or people with massive savings, not the average man in the street. Switzerland for example had/has negative rates to discourage investment as their frank is/was so strong it made them uncompetative.