Doesn’t inflation count? – Monday Musings 30/08/2021
Many of us do not think about the difference between saving and investing. In simple terms saving is usually putting money aside for a future purchase, such as a car or a holiday, investing is putting money aside for your future. This would usually be a longer-term project and would demand a greater potential for a real return.
I spent a happy few minutes looking at the rates being offered on easy access saving accounts and failed to find one that comes anywhere matching the inflation rate. The best offer is Tandem who are leading the way with 0.65%. The same applies to term and notice accounts. The best notice account is with the Oak North Bank which offers 1% on their 120 days notice account. If you are prepared to tie your cash up for three years your can get 1.57% from Zopa. If you think about instant access cash ISAs the best rate around is from Cynergy Bank who will offer you 0.65%. Oak North Bank will really excite you with their two year fixed term ISA with an thrilling 1.02%
There are a couple of things I fail to understand, the first is if you have an annual savings tax allowance of £1,000, which means that you would have to invest over £150,000 at 0.65% before you would be liable for tax on the interest, why would you waste your ISA allowance of £20,000. Surely you would be better off just leaving the money in a normal account and using your Savings Tax allowance. You should then take out a Stocks and Shares ISA which could be invested in line with your risk profile and should at least beat inflation.
Before looking at the markets let me briefly touch on Premium Bonds. Whereas in the 90s the prize rate was 5.2% it is now 1%. In simple terms this means that if you invested £10,000 back in the 90s you could expect to receive £520 per annum today you should expect £100.
Of course there is no doubt that all of the above have their place in any portfolio but, in my view only for the funds that you might need quickly for a purchase, or as your “rainy day money”. If you want to actually make money you really should consider asset backed investments.
So, to the markets
|04.01.2021||30.08.2021||% Change||% Change on week|
|FTSE 100||6571.80||7148.01||Up 8.78||Up 0.85|
|Dow Jones||30105.26||35455.80||Up 17.77||Up 0.96|
|Nasdaq||12696.74||15129.50||Up 19.16||Up 2.82|
|S&P||3695.49||4509.37||Up 22.02||Up 1.52|
|NIKKEI||27228.07||27641.14||Up 1.51||Up 2.32|
|Hang Seng||27431.07||25407.89||Down 7.37||Up 2.25|
|Shanghai||3502.13||3522.16||Up 0.57||Up 2.77|
|CAC 40||5584.96||6681.92||Up 19.64||Up 0.84|
|DAX||13733.08||15851.75||Up 15.42||Up 0.28|
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