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Woo! I just got some moneys!
Former Member
Posts: 1,876,323 The Mix Honorary Guru
Well, I had this strategy in mind - get a massive overdraft and use it to put into a savings account to make money for me. First year was a bit timid as very worried about things going pearshaped... but I just got £20! Ok, it's not massive by any means but I didn't do any work whatsoever! That's just keeping an average of about £400 of my £2750 overdraft in there over the year.
But what a buzz you get from actually making money, from money. It certainly acts as an incentive to save. I probably don't have the best savings account - Halifax variable websaver at 5.01% gross PA. Northern rock are doing savings accounts at 6.49% if you meet their standards, but obviously it's less flexible in case you need to pay out for something.
I might just dump my student loan in my savings this year and drip feed my current account as and when I need it. I'm sure Kermit mentioned having different bank accounts is a really good way of budgeting, anyway.
Now, to spend my £20.41 or to reinvest it? :chin:
But what a buzz you get from actually making money, from money. It certainly acts as an incentive to save. I probably don't have the best savings account - Halifax variable websaver at 5.01% gross PA. Northern rock are doing savings accounts at 6.49% if you meet their standards, but obviously it's less flexible in case you need to pay out for something.
I might just dump my student loan in my savings this year and drip feed my current account as and when I need it. I'm sure Kermit mentioned having different bank accounts is a really good way of budgeting, anyway.
Now, to spend my £20.41 or to reinvest it? :chin:
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savings accounts from the retail banks are a complete scam, although the shaky ones are offering better rates now to compete for your money as they need the reserves to meet capital ratio requirements, question is are you brave enough to put your money somewhere like northern rock?
£530.66 coming your way!
Your savings are guaranteed in Northern Rock anyway.
As for inflation, my savings 'grew' at 5.01% lets say as a rough number. It was probably more overall, as I have a variable interest rate.
http://www.thisismoney.co.uk/economy
CPI and RPI are both lower than my 5.01%. CPI doesn't include mortgages in working out inflation, so for 'supermarket' goods they went up an average of 2% over the last year.
I was saying on the chat last night, I get a 'buzz' from putting money away as I do from spending it like retail therapy.
good on you for saving don't get me wrong, just don't expect to get far with 5% return you are barely treading water......you might as well go for index-linked savings certificates with someone like ns&i, which guarantee a decent return above RPI and it's tax free, but then you're still stuck with the £ which is about to fall off a cliff......personally i'd open up a broker's account and put some away in norweigan kroner or swiss franc, you know somewhere with a half stable economy.
call me dumb, but i personally have no idea what you just said, and am very curious? have a building society and a normal one myself, and move money about as the interest is better in one etc...
and shyboy, spend spend spend!
eh?
Ok, in a nutshell:
Economists are predicting a recession. Based on speculation that prices will go up, people have been willing to pay more for investments / shares / houses you name it. The growth 'bubble' could not stop, apparently.
Anyway, with the sub-prime market in America collapsing, retail spending over the past few years slowing down, it appears that growth does, in fact have a limit.
So the value of all these investments - new businesses, shares in existing business, buy-to-let homes - is actually less than its currently thought to be. This causes a market correction as people realise their investment isn't going to make them as much money as they thought.
This means right now, any short term investments or 'purchases' seem like a poor idea, because you're paying more for what you're getting. Oil prices going through the roof has only made this worse.
To stop the economy from stalling and people start thinking 'oh god, I'm gonna lose my money' and shops not buying more stock from china because noone will buy and us hitting a depression where we'll end up growing our own fruit and veg - the bank of england is lowering interest rates.
Personally, I feel this is a poor move, as we're due for a correction, and we're just going to cause inflation by putting it off which will cause us to lose business in the long term, as venture capitalists plough their money away from the US and the UK where things are 'shaky' (if inflation goes through the roof, your investment is likely to lose a lot of value), and into 'safe' countries where growth is fairly steady.
This means the UK economy is set for a fall. When that happens you can expect the price of money to increase meaning any debts will get larger, people will become bankrupt and lose their homes if they have a big mortgage they can barely afford.
I'm putting some aside, therefore, in case of a 'rainy day'.
The BoE's policy at the minute is to keep cutting costs of borrowing money to try to keep the economy going and hopefully 'ride it out'. It could work, but in the past trying to stimulate the economy has caused inflationary problems which resulted in a worse market correction.
People are still trading though, so who knows. I don't think it's all doom and gloom and back to the stone ages - there's no need to panic. All I would suggest is try to live within your means rather than get unnecessary credit *in case* there is a large market correction.
What I'm doing though is a different kettle of fish. I ahven't actually got money to save, I'm borrowing the banks money (interest free cos I'm a student) to dump into savings accounts to earn some small amounts of interest. This only amounts to tens of pounds a year, but still nice
But, 'what goes up, must come down'.
The reason interest rates are set to rise is interest rates = the price of money = the supply and demand for money. Since spending is going down and incomes aren't coming up [to stave off inflation] the supply is going down, which means price goes up! Look for example at Northern Rock - their exact problem wasn't that they were in debt, it was that they didn't have the cash to back deposits i.e. if a lot of their customers wanted to withdraw cash they would have lots of 'income' still coming in from mortgages, but they didn't have the cash to hand, and the American banks weren't lending more out since they just lost a shitload on the sub-prime market. To try to counter this the BoE is lowering base rates (the rate the banks can borrow at), to give them cheap cash. That's a short term fix though and depends on other factors coming into play to 'rescue' the economy whilst giving people money keeps it ticking over.
http://www.ft.com/cms/s/0/6aeb2de6-c416-11dc-a474-0000779fd2ac.html
It's happening. Investors scared of losing their money in dodgy economies, pulling them back into savings accounts - means less cash in the pockets of companies to hire people and stuff. It'll take time to trickle through but this was inevitable anyway.
i wrote a long response to your other post shyboy but the damn thing crashed, long story short we are heading for deflation not inflation, interest rates are going down as the demand for commercial debt and private sector borrowing fall (supply and demand), this recession is a global phenomenon and not limited to the UK/US (because the risk has been spread globally - this is why german banks are blowing up when americans stop paying their mortgages), although we are in worse shape financially than anyone else, apart from maybe spain....despite these heavy deflationary factors you may still see inflation in other areas because of high energy prices (not to mention falling pound will destroy purchasing power and as we import a lot of goods this will cause "inflation"), although eventually massive demand destruction should move us from stagflation to all out deflation......kapeesh?