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Savings and Investments thread
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Just thinking out loud - the issue on the demand side of the economy isn't younger families with bigger mortgages, struggling to make ends meet. Unsecured spending on credit cards, personal loans and car finance is much more of an issue on the demand side, (even if you accept that the issue is demand rather than supply) so why can't there be a cap on existing mortgage rates (I don't know - let's say 4%) with banks having access to funds at or below that rate from the BoE for new mortgages, AND ONLY MORTGAGES. They can get it back via unsecured rates.
I'm not an economist of course (you've likely spotted that already) and the above may be somewhat naive!
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The challenge is reducing food costs I think. Some of which (most?) is also linked to fuel costs.
Those are inflationary costs none of us can meaningfully avoid. Government needs to find a way of achieving this.
People will be forced to cut back on any (relative) luxuries they may have - gym memberships, cleaners, holidays, social events, upgrading phones etc to prioritise housing costs and that will in turn hurt those industries of course. But are the steps individuals will (need to) take.
As to Bank's margins - not sure that's where the real problem or solution or lies but I am inclined to arguments I've heard made that we need the market to offer more long term fixed rates 10 / 25 years etc so people have certainty for longer and less impacted by more short term fluctuations on the core & most significant debt people have. That also requires a mindset change for some borrowers who have grown used to chasing short term deals believing the next rate will be even more attractive and not worse.
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Whilst 25 year fixes are rare, 10 years have been around for ages, but no one wanted them as you indicated! The argument being they weren't competitive enough. They are almost at 5% currently. The best lifetime ones are 6.85%.valleynick66 said:The challenge is reducing food costs I think. Some of which (most?) is also linked to fuel costs.
Those are inflationary costs none of us can meaningfully avoid. Government needs to find a way of achieving this.
People will be forced to cut back on any (relative) luxuries they may have - gym memberships, cleaners, holidays, social events, upgrading phones etc to prioritise housing costs and that will in turn hurt those industries of course. But are the steps individuals will (need to) take.
As to Bank's margins - not sure that's where the real problem or solution or lies but I am inclined to arguments I've heard made that we need the market to offer more long term fixed rates 10 / 25 years etc so people have certainty for longer and less impacted by more short term fluctuations on the core & most significant debt people have. That also requires a mindset change for some borrowers who have grown used to chasing short term deals believing the next rate will be even more attractive and not worse.
I've always been a fan of longer term fixes, but have gambled to a degree as could afford to do so. I think had I ever been in a tighter position I may have gone for the security.
Moved Dec 2021 and whilst I didn't need a mortgage I took one as it was so cheap (sub 1% for 5 year fix) and I knew I'd do better on my savings/investments. 10 years were around 2% I believe then, lifetime about 4%, that seems a bargain now!0 -
Hi - yes I agree - not much symapathy and understandable. I worked hard for it and am more annoyed that the tax, after returement, is still so high IMO and probably more annoyed with what I see as government wastage. Thank to you, @Rob7Lee and @golfaddick who mentioned Investment Bonds. Hadn't heard of those and googling it seems a possiblity - are there any recommendations??bobmunro said:
Your mortgage is paid off, you have pension income that puts you in the 40% tax bracket, you have the income to max your ISA allowance each year, and invest in PBs.CafcWest said:I am one of the so called "lucky ones" in that my mortgage is paid off and I have savings in the bank. But now the tories have reduced the amount you can earn on interest tax free it means the government get more of the interest paid. I have a good pension that puts me into the 40% tax bracket so after using up ISA allowance and investing in PBs then 40% of any extra interest I "earn" goes straight to Jeremy Hunt...any advice on (legal) ways to invest that doesn't attract UK tax greatly appreciated!
I will be in a similar position come the end of this year when I retire (although my tax bracket is 45%!) and I am more than happy to pay tax on any taxable interest I earn, although I will use my wife's 20% and 40% tax brackets for savings of course.
Not sure you'll get too much sympathy for your situation!0 -
Just reading everything in here it is so clear that one thing that is lacking in the governments globally is proper creativity and imagination to help solve the problem.
There's a lot of different levers that could be pulled in my opinion.0 -
Is your pension Defined benefit?CafcWest said:
Hi - yes I agree - not much symapathy and understandable. I worked hard for it and am more annoyed that the tax, after returement, is still so high IMO and probably more annoyed with what I see as government wastage. Thank to you, @Rob7Lee and @golfaddick who mentioned Investment Bonds. Hadn't heard of those and googling it seems a possiblity - are there any recommendations??bobmunro said:
Your mortgage is paid off, you have pension income that puts you in the 40% tax bracket, you have the income to max your ISA allowance each year, and invest in PBs.CafcWest said:I am one of the so called "lucky ones" in that my mortgage is paid off and I have savings in the bank. But now the tories have reduced the amount you can earn on interest tax free it means the government get more of the interest paid. I have a good pension that puts me into the 40% tax bracket so after using up ISA allowance and investing in PBs then 40% of any extra interest I "earn" goes straight to Jeremy Hunt...any advice on (legal) ways to invest that doesn't attract UK tax greatly appreciated!
I will be in a similar position come the end of this year when I retire (although my tax bracket is 45%!) and I am more than happy to pay tax on any taxable interest I earn, although I will use my wife's 20% and 40% tax brackets for savings of course.
Not sure you'll get too much sympathy for your situation!
There's an easy way not to pay tax on interest though........ spend the capital or give some away! I'm not sure of your age, but if you are already retired, drawing pensions and not spending all your income you need to start spending more or drawing less (if a DC in drawdown).
Golfie is probably your man on bonds, just remember bar the 5% you are effectively deferring income tax
EDIT;
Just a thought, but if you aren't spending all your income, and assuming you have children, start giving excess income to them, that's not chargeable for IHT in the future as long as it is truly surplus income (not capital). Let's be honest there's a high probability that come the next general election Labour will likely reduce things like the IHT allowances compared to now.
PS, buy gold sovereigns, legal tender so no tax, income or CGT.1 -
yes, over a 20 year period. So effectively you can withdraw all of your original investment.bobmunro said:
Also the 5% pa is cumulative/carry over if not used.golfaddick said:
Investment Bonds. You can take up to 5% pa without any immediate tax liability. If you have a spouse/partner who is a basic rate taxpayers even better. Also helpful latter as they can be put in Trust or assigned to someone else.CafcWest said:I am one of the so called "lucky ones" in that my mortgage is paid off and I have savings in the bank. But now the tories have reduced the amount you can earn on interest tax free it means the government get more of the interest paid. I have a good pension that puts me into the 40% tax bracket so after using up ISA allowance and investing in PBs then 40% of any extra interest I "earn" goes straight to Jeremy Hunt...any advice on (legal) ways to invest that doesn't attract UK tax greatly appreciated!0 -
Yes, Speak to an IFACafcWest said:
Hi - yes I agree - not much symapathy and understandable. I worked hard for it and am more annoyed that the tax, after returement, is still so high IMO and probably more annoyed with what I see as government wastage. Thank to you, @Rob7Lee and @golfaddick who mentioned Investment Bonds. Hadn't heard of those and googling it seems a possiblity - are there any recommendations??bobmunro said:
Your mortgage is paid off, you have pension income that puts you in the 40% tax bracket, you have the income to max your ISA allowance each year, and invest in PBs.CafcWest said:I am one of the so called "lucky ones" in that my mortgage is paid off and I have savings in the bank. But now the tories have reduced the amount you can earn on interest tax free it means the government get more of the interest paid. I have a good pension that puts me into the 40% tax bracket so after using up ISA allowance and investing in PBs then 40% of any extra interest I "earn" goes straight to Jeremy Hunt...any advice on (legal) ways to invest that doesn't attract UK tax greatly appreciated!
I will be in a similar position come the end of this year when I retire (although my tax bracket is 45%!) and I am more than happy to pay tax on any taxable interest I earn, although I will use my wife's 20% and 40% tax brackets for savings of course.
Not sure you'll get too much sympathy for your situation!
Investment Bonds are simply funds inside a tax wrapper - A single premium life assurance policy. Been around for years & they come in different guises, but there real secret is the funds you invest in.2 -
I think the suggestion is 10 year fixes are also rarer today as borrowers have favoured 2 years or even less & we perhaps need to move back to 5 years plus as the preferred / less risk option. More lenders might need to be persuaded to make those available.Rob7Lee said:
Whilst 25 year fixes are rare, 10 years have been around for ages, but no one wanted them as you indicated! The argument being they weren't competitive enough. They are almost at 5% currently. The best lifetime ones are 6.85%.valleynick66 said:The challenge is reducing food costs I think. Some of which (most?) is also linked to fuel costs.
Those are inflationary costs none of us can meaningfully avoid. Government needs to find a way of achieving this.
People will be forced to cut back on any (relative) luxuries they may have - gym memberships, cleaners, holidays, social events, upgrading phones etc to prioritise housing costs and that will in turn hurt those industries of course. But are the steps individuals will (need to) take.
As to Bank's margins - not sure that's where the real problem or solution or lies but I am inclined to arguments I've heard made that we need the market to offer more long term fixed rates 10 / 25 years etc so people have certainty for longer and less impacted by more short term fluctuations on the core & most significant debt people have. That also requires a mindset change for some borrowers who have grown used to chasing short term deals believing the next rate will be even more attractive and not worse.
I've always been a fan of longer term fixes, but have gambled to a degree as could afford to do so. I think had I ever been in a tighter position I may have gone for the security.
Moved Dec 2021 and whilst I didn't need a mortgage I took one as it was so cheap (sub 1% for 5 year fix) and I knew I'd do better on my savings/investments. 10 years were around 2% I believe then, lifetime about 4%, that seems a bargain now!0 -
Problem with a 10 year fixed rate is that 10 years is a bloody long time. I've been married twice & neither got past 9 years !valleynick66 said:
I think the suggestion is 10 year fixes are also rarer today as borrowers have favoured 2 years or even less & we perhaps need to move back to 5 years plus as the preferred / less risk option. More lenders might need to be persuaded to make those available.Rob7Lee said:
Whilst 25 year fixes are rare, 10 years have been around for ages, but no one wanted them as you indicated! The argument being they weren't competitive enough. They are almost at 5% currently. The best lifetime ones are 6.85%.valleynick66 said:The challenge is reducing food costs I think. Some of which (most?) is also linked to fuel costs.
Those are inflationary costs none of us can meaningfully avoid. Government needs to find a way of achieving this.
People will be forced to cut back on any (relative) luxuries they may have - gym memberships, cleaners, holidays, social events, upgrading phones etc to prioritise housing costs and that will in turn hurt those industries of course. But are the steps individuals will (need to) take.
As to Bank's margins - not sure that's where the real problem or solution or lies but I am inclined to arguments I've heard made that we need the market to offer more long term fixed rates 10 / 25 years etc so people have certainty for longer and less impacted by more short term fluctuations on the core & most significant debt people have. That also requires a mindset change for some borrowers who have grown used to chasing short term deals believing the next rate will be even more attractive and not worse.
I've always been a fan of longer term fixes, but have gambled to a degree as could afford to do so. I think had I ever been in a tighter position I may have gone for the security.
Moved Dec 2021 and whilst I didn't need a mortgage I took one as it was so cheap (sub 1% for 5 year fix) and I knew I'd do better on my savings/investments. 10 years were around 2% I believe then, lifetime about 4%, that seems a bargain now!
The early redemption penalties would have to be a lot lower- 5 year ones generally start at 5% and reduce down to 1% for the final year. Santander's (I think) are 5% for all 5 years.
The product guys had better put their thinking caps on.3 - Sponsored links:
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valleynick66 said:
I think the suggestion is 10 year fixes are also rarer today as borrowers have favoured 2 years or even less & we perhaps need to move back to 5 years plus as the preferred / less risk option. More lenders might need to be persuaded to make those available.Rob7Lee said:
Whilst 25 year fixes are rare, 10 years have been around for ages, but no one wanted them as you indicated! The argument being they weren't competitive enough. They are almost at 5% currently. The best lifetime ones are 6.85%.valleynick66 said:The challenge is reducing food costs I think. Some of which (most?) is also linked to fuel costs.
Those are inflationary costs none of us can meaningfully avoid. Government needs to find a way of achieving this.
People will be forced to cut back on any (relative) luxuries they may have - gym memberships, cleaners, holidays, social events, upgrading phones etc to prioritise housing costs and that will in turn hurt those industries of course. But are the steps individuals will (need to) take.
As to Bank's margins - not sure that's where the real problem or solution or lies but I am inclined to arguments I've heard made that we need the market to offer more long term fixed rates 10 / 25 years etc so people have certainty for longer and less impacted by more short term fluctuations on the core & most significant debt people have. That also requires a mindset change for some borrowers who have grown used to chasing short term deals believing the next rate will be even more attractive and not worse.
I've always been a fan of longer term fixes, but have gambled to a degree as could afford to do so. I think had I ever been in a tighter position I may have gone for the security.
Moved Dec 2021 and whilst I didn't need a mortgage I took one as it was so cheap (sub 1% for 5 year fix) and I knew I'd do better on my savings/investments. 10 years were around 2% I believe then, lifetime about 4%, that seems a bargain now!
All the mainstream lenders (and many others) do 10 years and have done for some while. Whole term/lifetime is much rarer.
They just aren't popular with the buying public as only in very rare times (and we may be in one) would it have paid to have had one.
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golfaddick said:
Its called a "Structured Product" and as @Rob7Lee says its really just a bet against an Index. Generally for UK investors the Indices used are the FTSE100, S&P500 and the EuroStox50. There are 2 types of Structured products; Deposit and Investment. Deposit ones are usually Capital Protected (up to the £85k FSCS limit) and means that your initial investment is safe & returned on maturity. Investment based ones are not protected & you can lose your initial capital (usually after a certain barrier has been breached so will give you some protection (usually 40%) ). The main other difference between the 2 is that Deposit ones are taxed as income whereas Investment based ones use CGT. Over the past 15 years I've generally advised Investment based ones as my clients are mostly higher rate taxpayers & so paying 40% tax on returns wasn't worth it. Also, most clients don't use their annual CGT allowance so this was a good way of mitigating any tax that would become due.valleynick66 said:
Thanks - what is the product to learn some more?golfaddick said:
Yep.... thats about the long & short of it.valleynick66 said:
So you are just 'risking' not getting additional upside if the FTSE does better than 8% per annum?golfaddick said:Just had an email through regarding a Deposit-based Structured Product & has the usual £85k protection. Based on the level of the FTSE in 5 years time it pays 40% (8%pa) if the FTSE is at least level with its starting point or 35% (7%pa) if the FTSE is at least 90% of its starting point. 2nd option seems very tempting - but obviously these are taxable in line with usual savings accounts, although are ISA-able so can put £20k for tax-free returns.
Obviously there are other implications such as tax (income tax in a Deposit based SP structure) compared to CGT if you invest in the FTSE directly and also the fixed time frames involved
Just thought it was worth pointing out to those trying to get a good return on their cash deposits.
Ps
Obviously this is not a solicitation to buy or a financial promotion advertisement.
However, with the reduction in the CGT allowance I find the Investment based SP's are now almost redundant, and with the rising interest rate Deposit based ones are having to fight with Banks for peoples' money and (as can be seen) are producing some decent returns.
So currently the one I mentioned closes on July 21st. A reading of the FTSE100 is then taken and that is the Initial Level which the returns are measured against. Option 1 will pay 40% (8%pa over the 5 year term) should the FTSE100's level on 21st July 2028 be at least 1 point higher than the Initial level (so lets say 7600 points now - it has to be 7601 in 5 years time). If that is the case you will get back your initial investment plus 40%. Option 2 will pay 35% as long as the FTSE100 is more than 90% from its Initial Level - so 7600x90%=6840. If the FTSE100 is at 6841 in 5 years time you'll get back your initial investment plus 35%.
In essence, the FTSE100 falls 10% over the next 5 years & you get a 35% gain. If it falls 11% over that time period you only get your money back.
However (2) - these are not for everyone and really only for people who annually use their ISA allowance, have "spare" money and are prepared to lock their money up for 3,4,5 or 6 years.
Oh.........and as @Rob7Lee also says - you generally have to go through an IFA to invest in one, certainly if its your first "dabble" in them.
Structured products offered to the public, are generally made up like this:
- capital goes to buy a bond, matching the tenure of the product (e.g. 3-year, 5-year)
- the coupons from the bond are then used to buy a strip (succession over time) of equity index options, e.g. FTSE 100 calls
Hence, you get the 'capital protected' element from the capital return of the bond, the upside from the options.
The limit in the upside in this case will be because they are buying bull spreads - i.e selling calls further up to keep the premium cost of the calls down, hence forgoing additional upside.
With the 90% ones, they use a bit of the bond's capital to buy additional calls, that's all.
There are two main risks:
- as with any other bond product, if you need the money early, you may find it is worth considerably less than you paid for it
- the bond and the options are under-written by counter-parties and you therefore potentially have counterparty credit risk. For a retail product - Golfie will know - it may be that the issuer under-writes this separately but I would check.
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With just a couple of days to go, very close;
Name Level Variance % Variance Covered End 7508 7.82 0.10% CAFCWest 7510 9.82 0.13% Salad 7511 10.82 0.14% Morboe 7554 53.82 0.72% Fortune 82nd Minute 7440 60.18 0.80% Thread Killer 7423 77.18 1.03% cafc7-6htfc 7600 99.82 1.33% LargeAddick 7647 146.82 1.96% blackpool72 7650 149.82 2.00% wwaddick 7350 150.18 2.00% Addick Addict 7652 151.82 2.02% guinnessaddick 7658 157.82 2.10% Hoof_it_up_to_benty 7675 174.82 2.33% Jon_CAFC_ 7675 174.82 2.33% fat man on a moped 7685 184.82 2.46% RalphMilne 7689 188.82 2.52% PragueAddick 7300 200.18 2.67% thecat 7710 209.82 2.80% IdleHans 7745 244.82 3.26% Redman 7250 250.18 3.34% Bangkokaddick 7767 266.82 3.56% CharltonKerry 7777 276.82 3.69% Rob7Lee 7785 284.82 3.80% Daarrrzzettbum 7800 299.82 4.00% aitchyaddick 7809 308.82 4.12% golfaddick 7824 323.82 4.32% StrikerFirmani 7840 339.82 4.53% Pedro45 7153 347.18 4.63% valleynick66 7856 355.82 4.74% meldrew66 7117 383.18 5.11% cafcpolo 7893 392.82 5.24% holyjo 7912 411.82 5.49% HardyAddick 7913 412.82 5.50% oohaahmortimer 7077 423.18 5.64% TheGhostofTomHovi 7966 465.82 6.21% @TelMc32 8000 499.82 6.66% bobmunro 6950 550.18 7.34% WishIdStayedInThe Pub 6625 875.18 11.67% Er_Be_Ab_Pl_Wo_Wo_Ch 6500 1000.18 13.34% 1 -
I'm giving up this prediction lark. I go low, the market picks up. I go high, the market slumps.
I blame Boris.5 -
I"m with you. Maybe we should sell our predictions to the market as sentiment analysis.golfaddick said:I'm giving up this prediction lark. I go low, the market picks up. I go high, the market slumps.
I blame Boris.2 -
Where was the index at the start of this round?0
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Think it closed at 7541 om 30/12.0
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Opened on 3rd January at 7451.74, so not too far from where it is today.PragueAddick said:Where was the index at the start of this round?1 -
UK & US stockmarkets have been very flat so far this year. FTSE100 down 1%, Dow Jones up 2.85% whilst S&P500 up just 0.3%.WishIdStayedinthePub said:
Opened on 3rd January at 7451.74, so not too far from where it is today.PragueAddick said:Where was the index at the start of this round?
Europe a lot better with Germany up 13%, France 11% & Spain 14%......making the broad Eurostoxx up 13%.
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The S&P500 has been up just under 15pc YTD @golfaddick?0
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Ooops, yes, you're right. Must have been looking at the wrong chart. Thought it looked wrong.mendonca said:The S&P500 has been up just under 15pc YTD @golfaddick?.1 -
Just a few hours to go, as it stands:
FTSE100 Level 7,525.66 Name Level Variance % Variance Salad 7511 14.66 0.19% CAFCWest 7510 15.66 0.21% Covered End 7508 17.66 0.23% Morboe 7554 28.34 0.38% cafc7-6htfc 7600 74.34 0.99% Fortune 82nd Minute 7440 85.66 1.14% Thread Killer 7423 102.66 1.36% LargeAddick 7647 121.34 1.61% blackpool72 7650 124.34 1.65% Addick Addict 7652 126.34 1.68% guinnessaddick 7658 132.34 1.76% Hoof_it_up_to_benty 7675 149.34 1.98% Jon_CAFC_ 7675 149.34 1.98% fat man on a moped 7685 159.34 2.12% RalphMilne 7689 163.34 2.17% wwaddick 7350 175.66 2.33% thecat 7710 184.34 2.45% IdleHans 7745 219.34 2.91% PragueAddick 7300 225.66 3.00% Bangkokaddick 7767 241.34 3.21% CharltonKerry 7777 251.34 3.34% Rob7Lee 7785 259.34 3.45% Daarrrzzettbum 7800 274.34 3.65% Redman 7250 275.66 3.66% aitchyaddick 7809 283.34 3.76% golfaddick 7824 298.34 3.96% StrikerFirmani 7840 314.34 4.18% valleynick66 7856 330.34 4.39% cafcpolo 7893 367.34 4.88% Pedro45 7153 372.66 4.95% holyjo 7912 386.34 5.13% HardyAddick 7913 387.34 5.15% meldrew66 7117 408.66 5.43% TheGhostofTomHovi 7966 440.34 5.85% oohaahmortimer 7077 448.66 5.96% @TelMc32 8000 474.34 6.30% bobmunro 6950 575.66 7.65% WishIdStayedInThe Pub 6625 900.66 11.97% Er_Be_Ab_Pl_Wo_Wo_Ch 6500 1025.66 13.63% 1 -
Congrats to Salad, managed to hold on!
Lots were close, and some not so!
Until next time........FTSE100 Level 7,531.53 Name Level Variance % Variance Salad 7511 20.53 0.27% CAFCWest 7510 21.53 0.29% Morboe 7554 22.47 0.30% Covered End 7508 23.53 0.31% cafc7-6htfc 7600 68.47 0.91% Fortune 82nd Minute 7440 91.53 1.22% Thread Killer 7423 108.53 1.44% LargeAddick 7647 115.47 1.53% blackpool72 7650 118.47 1.57% Addick Addict 7652 120.47 1.60% guinnessaddick 7658 126.47 1.68% Hoof_it_up_to_benty 7675 143.47 1.90% Jon_CAFC_ 7675 143.47 1.90% fat man on a moped 7685 153.47 2.04% RalphMilne 7689 157.47 2.09% thecat 7710 178.47 2.37% wwaddick 7350 181.53 2.41% IdleHans 7745 213.47 2.83% PragueAddick 7300 231.53 3.07% Bangkokaddick 7767 235.47 3.13% CharltonKerry 7777 245.47 3.26% Rob7Lee 7785 253.47 3.37% Daarrrzzettbum 7800 268.47 3.56% aitchyaddick 7809 277.47 3.68% Redman 7250 281.53 3.74% golfaddick 7824 292.47 3.88% StrikerFirmani 7840 308.47 4.10% valleynick66 7856 324.47 4.31% cafcpolo 7893 361.47 4.80% Pedro45 7153 378.53 5.03% holyjo 7912 380.47 5.05% HardyAddick 7913 381.47 5.06% meldrew66 7117 414.53 5.50% TheGhostofTomHovi 7966 434.47 5.77% oohaahmortimer 7077 454.53 6.04% @TelMc32 8000 468.47 6.22% bobmunro 6950 581.53 7.72% WishIdStayedInThe Pub 6625 906.53 12.04% Er_Be_Ab_Pl_Wo_Wo_Ch 6500 1031.53 13.70% 6 -
I came 1st last time and 9th this time so I'm quite happy with that.
Congratulations Salad it was tough predicting this time what with all that's going on in the world.5 -
Premium bonds up from 3.7% to 4% from August.1
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With thanks to this thread, I finally got around to putting a chunk of money into Premium Bonds. First time I've ever really done anything remotely 'different' with my savings beyond just letting them sit there in a bank account.
£150 for my first prize.4 -
£200 each for me and my wife0
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£150 for me.
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Zero for me & £25 for herself.0
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Nothing this month 😪0
