Savings Interest Rates Getting Worse

[CatmanV2]

Personally I'm going with
3
2
1
4

Well nearly....

C

 

[JonW]

I've been looking at this and have concluded that it's all shite. Honestly, there are no good rates. Even ISAs pay out sod all. You may as well just leave it in your current account. RPI is higher than most interest rates so the value of that saved money will fall in real terms. My thinking is that the priorities are:

1. Some kind of pension. Could be an actual pension or enough liquidity to ride out a retirement
2. Pay off all debts in descending order of interest rate
3. Enough money in the war-chest to cope with xx months or not generating any income
4. Blow it on cars.

The jury seems to be out on whether any spare cash should be thrown at the mortgage or put in the rainy day pot. As the rainy day pot pays feck all interest then it may as well go on the mortgage, which incurs a cost.

But that's a layman's opinion. Greater minds know far more about all this fun stuff than I do.

Suspect you’re right Adam... but it will be interesting to see if anyone on here has an alternate view. I‘ve only started to think about it recently, and suspect there may be others on here who have gone through a similar thought process.

 

[Felonious Crud]

Suspect you’re right Adam... but it will be interesting to see if anyone on here has an alternate view. I‘ve only started to think about it recently, and suspect there may be others on here who have gone through a similar thought process.

Ditto, Jon. Although I should add a further option, according to Mrs Crud: bathrooms, windows, carpets and assorted domestic shite.

 

[GeoffCapes]

I blame Brexit.

 

[daverichardson]

As the resident Fossil on this forum I have indeed been through this thought process in earlier days.
I am now revisiting in order to guide my 2 boys.
1 Pay off all debts including mortgage and credit cards, (keep a credit card if you wish in order to get financial protection on big spends that may go wrong but pay it off asap).
2 Provide money for old age, usually a pension but maybe property or other investments (Wattie?). Start this provision no later than 40 ish years of age. Future pensions will be vastly different for my sons compared to what I get. It is simply not sustainable. This would also include a regular monthly income.
3 Launder money to prevent SS (Social Services) getting their mits on it before you go gaga
4 Consider putting your home in Trust and consider Power of Attorney health and financial (I am doing this now - LPoA via HMRC and costs about £80)
5 Arrange payment for your funeral (and wife)
6 Enjoy what you have accrued!

The nature of this forum means generally we the members have not made a bad fist of life so the above may not be right for everyone. I am not even sure it is right for me but decisions have to be made and I submit it as a guide only. I am happy to discuss more openly or via PM should anyone wish to add anything.
Good luck

 

[Felonious Crud]

As the resident Fossil on this forum I have indeed been through this thought process in earlier days.
I am now revisiting in order to guide my 2 boys.
1 Pay off all debts including mortgage and credit cards, (keep a credit card if you wish in order to get financial protection on big spends that may go wrong but pay it off asap).

Credit cards are a good thing used well. I've come unstuck on them in the past and dread to think how much interest I've paid over the years. It's probably horrific. Now I used them to earn airline miles, which subsidise holidays.

 

[rockits]

I did some working out a while back and although interest rates are low it seemed better to pay a chunk off the mortgage to get the biggest gain/VFM.

I just didn't want to do anything so permanent and wanted something with some flexibility and more liquid. I've got a fair size mortgage....well to me anyway so it makes sense.

The issue is we will push on now with the planning application to build a new house. If I try to keep the existing house and rent it on a BTL I will need to remortgage to the hilt to rip enough asset value out that should fund the new house build. Then means that it would be very tight to rent it for enough to pay the BTL mortgage on it.

It may make more sense to build the house then sell the old one as it will leave us under much less stress/pressure. Also sitting in a nice house, mortgage free and worth maybe £1.5m-£2m depending on what we get to build. Then you get that age old problem that many previous generations have of having no cash or liquid investments but all your cash tied up in one big asset. It all depends what the existing house will sell for if we sold it. I suspect it may sell for much more than I have conservatively earmarked thus leaving us with a few hundred k left to invest and build a pension from.

Then we would need to work out how much you need invested in a pension to be able to live of it. With rates of returns and yields being pants therein lies an issue of returns on that sh1te investment. It is a real difficuklt one to know what best to do medium to long term. However if you are in good enough health maybe just switch to a job you really like for much less money and that gets you somewhere in between.

Who knows? I welcome any thoughts feeding into all this

 

[Felonious Crud]

I did some working out a while back and although interest rates are low it seemed better to pay a chunk off the mortgage to get the biggest gain/VFM.

I just didn't want to do anything so permanent and wanted something with some flexibility and more liquid. I've got a fair size mortgage....well to me anyway so it makes sense.

The issue is we will push on now with the planning application to build a new house. If I try to keep the existing house and rent it on a BTL I will need to remortgage to the hilt to rip enough asset value out that should fund the new house build. Then means that it would be very tight to rent it for enough to pay the BTL mortgage on it.

It may make more sense to build the house then sell the old one as it will leave us under much less stress/pressure. Also sitting in a nice house, mortgage free and worth maybe £1.5m-£2m depending on what we get to build. Then you get that age old problem that many previous generations have of having no cash or liquid investments but all your cash tied up in one big asset. It all depends what the existing house will sell for if we sold it. I suspect it may sell for much more than I have conservatively earmarked thus leaving us with a few hundred k left to invest and build a pension from.

Then we would need to work out how much you need invested in a pension to be able to live of it. With rates of returns and yields being pants therein lies an issue of returns on that sh1te investment. It is a real difficuklt one to know what best to do medium to long term. However if you are in good enough health maybe just switch to a job you really like for much less money and that gets you somewhere in between.

Who knows? I welcome any thoughts feeding into all this

It depends where you want to live as well. You live in a very expensive area now. With the small people grown up and fled (one day), will you still need to live there or could you bail to somewhere less pricey and trouser the difference?

 

[rockits]

True and useful valid point. I wouldn't rule out a move but do like it here and would only move if it was an equally low densely or lower densely populated immediate area. No neighbours would be good

How much would the Skyfall mansion/plot cost?!

 

[daverichardson]

The biggest problem I found with all this is that I did not know what was going to happen. It is therefore impossible to plan for the unknown. I overestimated for example how much monthly income I would need to maintain my decent lifestyle. I made best educated guesses for this small problem and still got it wrong. When it comes to the larger problems - longevity, health we are all stumbling around in the dark. However on the brighter side you make your decision and adapt it as suits. For myself I felt good that I had made decisions even though they need tweaking. Not making a decision is the easy option but also the most fraught. I still suffer from this today it is a consequence of getting old and must be avoided at all costs

 

[empzb]

I've been looking at this and have concluded that it's all shite. Honestly, there are no good rates. Even ISAs pay out sod all. You may as well just leave it in your current account. RPI is higher than most interest rates so the value of that saved money will fall in real terms. My thinking is that the priorities are:

1. Some kind of pension. Could be an actual pension or enough liquidity to ride out a retirement
2. Pay off all debts in descending order of interest rate
3. Enough money in the war-chest to cope with xx months or not generating any income
4. Blow it on cars.

The jury seems to be out on whether any spare cash should be thrown at the mortgage or put in the rainy day pot. As the rainy day pot pays feck all interest then it may as well go on the mortgage, which incurs a cost.

But that's a layman's opinion. Greater minds know far more about all this fun stuff than I do.

This is my issue at the moment. The returns don't warrant the interest earned and I'd prefer to have money where I can see/access/use in the short term, for if work dries up I can cover Bill's for the next couple of years if need be. Sure the mortgage is bigger, but access to cash is proving more of a comfort to me.

Heck you could buy and flip a car to earn the interest you'd get on most accounts if you have a spare day or so.

 

[Hawk13]

I did some working out a while back and although interest rates are low it seemed better to pay a chunk off the mortgage to get the biggest gain/VFM. ........

......... Who knows? I welcome any thoughts feeding into all this

The alternative view to this is that there is little benefit to paying off a mortgage.

£100,000 of mortgage (interest only) at 2% is going to cost you £166 a month.

If you have saved £100,000 the chances are that £166 per month is not going to be a struggle financially and knowing you have a good lump sum behind you if the sh!t hits the fan can be comforting.

 

[Hawk13]

Heck you could buy and flip a car to earn the interest you'd get on most accounts if you have a spare day or so.

A mate of mine used to do this. He would buy a scruffy Merc / BMW / whatever one weekend, polish the **** out of it and sell it the next. Some of the money he made simply by making a car look shiny amazed me.

 

[Hawk13]

Back on track .....

If you want no risk and easy, bank accounts are pretty much your only option .... other than premium bonds which are only good value if you win

Conventional wisdom / track record says bricks and mortar and FTSE 100 shares offer the best long term returns.

Personally my investment money is in property and will continue to be. I have other assets that are appreciating (classic vehicles and watches) but I own them for pleasure first and foremost.

 

[rockits]

The alternative view to this is that there is little benefit to paying off a mortgage.

£100,000 of mortgage (interest only) at 2% is going to cost you £166 a month.

If you have saved £100,000 the chances are that £166 per month is not going to be a struggle financially and knowing you have a good lump sum behind you if the sh!t hits the fan can be comforting.

True but my mortgage is repayment and circa 3.5x that. Although of course that is paying off some capital. So £100k invested in something liquid like an instant access savings account might get you 1.25% gross so circa 1% nett? So £1k interest nett.

Isn't that 2% a high rate though? You could get £100k for a bit less than that even maybe £150pm. Even still I can see your point that there is little sense paying the chunk off the mortgage. This is presuming people are getting their 1% interest which many seem not to be getting.

There must be some better ways to make that cash work harder. Black or red?!

 

[rockits]

I can't set up new DDs but can transfer to either existing or new payees. With the cheque you take a photo with the app (at least with the HSBC)

C

I used the HSBC app today to pay in a cheque so thanks Catman for that.

Slight fly in the ointment being there is a max daily amount of cheques you can pay in this way......£750. Chocolate teapot springs to mind.

I guess I'll take a special unnecessary trip to the Potters Bar Post Office. Can't go to HSBC as they closed it down

 

[CatmanV2]

I used the HSBC app today to pay in a cheque so thanks Cayman for that.

Surely if you're baking in the Caymans, they come to you?

Slight fly in the ointment being there is a max daily amount of cheques you can pay in this way......£750. Chocolate teapot springs to mind.

I've not seen £750 in cheques in the last 5 years!

C

 

[Felonious Crud]

I used the HSBC app today to pay in a cheque so thanks Cayman for that.

Slight fly in the ointment being there is a max daily amount of cheques you can pay in this way......£750. Chocolate teapot springs to mind.

I guess I'll take a special unnecessary trip to the Potters Bar Post Office. Can't go to HSBC as they closed it down

First world problem. The only cheques I get sent are train delay refunds, and that's only ever twenty or thirty quid.

Still, paying in by app is just wonderful.

 

[rockits]

Surely if you're baking in the Caymans, they come to you?

Fixed that typo now I am a long long long way off banking in the Caymans

I've not seen £750 in cheques in the last 5 years!

C

I don't often see cheques at all. Then I get one and it is too big

 

[JonW]

As the resident Fossil on this forum I have indeed been through this thought process in earlier days.
I am now revisiting in order to guide my 2 boys.
1 Pay off all debts including mortgage and credit cards, (keep a credit card if you wish in order to get financial protection on big spends that may go wrong but pay it off asap).
2 Provide money for old age, usually a pension but maybe property or other investments (Wattie?). Start this provision no later than 40 ish years of age. Future pensions will be vastly different for my sons compared to what I get. It is simply not sustainable. This would also include a regular monthly income.
3 Launder money to prevent SS (Social Services) getting their mits on it before you go gaga
4 Consider putting your home in Trust and consider Power of Attorney health and financial (I am doing this now - LPoA via HMRC and costs about £80)
5 Arrange payment for your funeral (and wife)
6 Enjoy what you have accrued!

The nature of this forum means generally we the members have not made a bad fist of life so the above may not be right for everyone. I am not even sure it is right for me but decisions have to be made and I submit it as a guide only. I am happy to discuss more openly or via PM should anyone wish to add anything.
Good luck

In response to point 3:

https://www.bbc.co.uk/news/av/stories-50123587/how-money-laundering-works