secondly, re the whole inflation/deflation thingamy. At the moment all the indicators are deflationary.....deflation is the big concern for monetary policy makers hence they'd like to avert it at all costs......although rock bottom intrest rates don't appear to be having the desired effect so expect a new policy every day to combat the deflationary spiral. i wouldn't worry about hyperinflation, but high inflation (note, not hyperinflaton) is certainly a possibility a few years down the road.
Basically it is very complicated, and some of the information appears to be contradictary but basically if you've got cash and if you've got job security your sitting pretty. If you've got equities they've taken a battering (our own FTSE is bobbing along below 4000) and if you've bought a house in the last few years, well your mostly likely in negative equity.......and that isn't going to change anytime soon.
nice to see that one or two of you are now distrustful of the govt....but HELLO!! Where have you all been for the last seven years. Our economy was shouting bubble bubble bubble in big, red neon letters from about 2002 onwards.
the dotcom bubble was replaced by a massive housing and consumer spending bubble.....you could argue also a public spending bubble. Our public spending commitments on things such as BSF never looked realistic or sustainable. These commitments would be fine if the govt. got value for money and could produce meaningful outcomes from this expenditure, but value for money and nulabour....well, let's just say never the twain shall meet.
It should be no surprise to anyone that the govt. are busy dreaming up ways of screwing us out of money to make sure they can pay the consultants and architects fee. Ofcourse the govt. will argue that they absolutely must find the money to pay for BSF because it's a stimulus to the economy.
Well, i've got an idea for a stimulus that Mr G. Brown might like to consider. How about he gives us all 50 grand each to 'stimulate' the economy. Rather than pi$$ it all on grand ego trips. I could use that money to give my offspring a few years of a half-decent education in the private sector (well, it beats sending them to an academy) and what's left over, well I promise i won't buy any imported junk, i'll make sure i buy british. to safeguard british jobs for, erm, EU workers :confused:
Perhaps deposit it in one of the last remaining mutual building societies? You won't get much interest but it ought to be safe there.... but is it really?
Or do you keep it in a suitcase under the bed, where some low-life might come along and nick it?
How about buried in the garden at dead of night? Just hope one of your neighbours is not watching :)
my point is that having savings and having liquid funds in the form of cash (i've got my money in a mutual not in a suitcase ;))is a sensible thing to do in the face of depreciating asset values and equities, taking money out of the lgps isn't necessarily a prudent thing to do if you take the longer view.
the thing about the lgps is that it does indeed appear still to be a final salary pension scheme (answered my own question there), and ofcourse depending on length of service and other details in the fine print, it will in theory provide financial security at 65 and then there's provision for retirement through ill-health before 65.
But, and this is a big but, for how much longer can it be a final salary scheme for NEW members......as it is the councils collectively have billions of pounds in pension deficit. so paying into it now, plus the benefit of emloyer contributions and the ability to transfer the pension in the event of change of circumstances is useful....but there's a serious debate as to whether the whole thing isn't a bit of a timebomb - and questions about who's going to foot the bill to pay the shortfall and ensure a final salary for the retirees.
No doubt the council tax payer will pony up to pay for it in the end through council tax increases.....just as the income tax payer will pony up to pay for all the spending commitments and blackholes. nobody will notice as the tax bills don't come itemised. ;)
I think that it is important to spread the risk; don't put all of your cash into the hands of one organisation or one type of asset, especially if you are lucky enough to have more than the Govt safety net allows.
I'm not convinced on deflation, yes RPI is 0.1% but CPI is still 3% (1% above target). Inflation is only a general measure anyway, how do you decide which goods and services to include? My own personal inflation rate is already 7-10%. Many goods and services are going UP in price. Food, Tax, Water Rates, Transport Costs etc. The poor exchange rate will also make all imports more expensive so that's clothing and electronics up as well. BOE Base rate is 1% but it is impossible to borrow money at that rate. For Example if I wanted to take a Mortgage through Northern Rock with a 15% deposit (the smallest deposit widely available but still more money than most could save in a few years) it would be a 7% interest rate. If I wanted a loan it would likely be 10-12%, Credit Card 15%+, Overdraft 20-30% etc. All much higher than the base rate.Quote:
secondly, re the whole inflation/deflation thingamy. At the moment all the indicators are deflationary.....deflation is the big concern for monetary policy makers hence they'd like to avert it at all costs......although rock bottom interest rates don't appear to be having the desired effect so expect a new policy every day to combat the deflationary spiral. i wouldn't worry about hyperinflation, but high inflation (note, not hyperinflation) is certainly a possibility a few years down the road.
BBC NEWS | Business | Personal inflation calculator
Don't believe in pensions in general tbh, the whole idea just doesn't work for me...
a) don't wanna sound morbid but who knows if you'll be there to collect the money for starters?
b) if you leave and the £££ you've paid in is a decent amount but nothing enough to live on it's stuck in limbo for years
c) I'd rather have cash in my hand then decide what to do with it rather than wait till I'm old and past it when I can't enjoy it anymore :p
I'm not stupid with monies and make sure it goes in savings as well as buying shiny stuff so no pension worries for me :D
Whole thing stinks with BSF, wonder how many of these Government officials have shares in the BSF companies that we don't know about :rolleyes:
When did Robert Maxwell rise from the grave?
also, your mortgage info is a little bit out of date. Certainly 90% LTV is the absolute minimum that you can expect from most lenders, and that's a 10% deposit and last time i checked plenty of fixed rates deals at 90% LTV were lower than 7%. most trackers at that LTV will now track at upwards of 3% above the BoE base rate. sure some lenders will start offering 7% deals for 5% deposit down at some point in the future, but the 7% and upwards deals are strictly for the subprime. You'll definitely get a better deal with 85% LTV, and you don't need to go to northern crock either. ;)
don't forget the issue of mortgage availabiltiy isn't so much a liquidity or scarcity issue, lenders are in part pricing in anticipated falls in the value of UK housing. In other words they are pricing in risk and being risk averse.
We've already seen a 17% fall Year on Year according to the major indices, if someone had bought with a 15% desposit in early 2008 they'd run a real risk of staring at negative equity if they hadn't paid down several thousand off the principal. so house prices are clearly deflationary. and large deposits are a factor of a sharply deflating housing market.
And our housing market is the key to our economy in a sense.
i don't envisage a doomsday scenario such as that. While there appears to be a bit of a race to the bottom when it comes to world currencies, that's mainly a case of countries trying to remain competitive and lower the cost off borrwing.. compare the value of savings with how the housing market has fallen off a cliff and how badly the stock market is doing and it begs the question.... why would anyone partake in wealth destruction by buying into a depreciating assets ?
this was a feature of the great depression. and we seem to be reaching that stage where those looking to snapple up bargains are realising that actually things are getting progressively worse and there is no sharp bounceback.
And at the moment the cash rich and those with itchy feet want a 'home' for their cash, maybe they are worrying about a devalued pound but i personally am more concerned with the problems besetting equities and housing. cash is my safe haven, but i agree with you that i don't have anything in savings beyond the govt. guarantee in the same insititution and it's good to have broad portfolio of investments. one of the problems of the last 8 years has been the group think which stated that housing was the only investment needed....that housing was the profit and the pension. IT was ludicrous for so many to have viewed housing as the only investment and pension game in town.
one of the things the govt. seem to be doing is learning from the NR debacle as to how to takeover stricken banks and how to guarantee deposits. So i'm not worried about deposits. yet.
I'm seriously considering pulling out of the LGPS.
There is already bitter resentment towards public sector workers and the mystical "Gold plated" pension. Don't have the figures to hand but I believe the public sector pension liability is nigh on £1trillion. When all in the private sector are getting shafted, do not expect them to react kindly to funding public sector pensions. After all, the private sector is where wealth is created. The public sector just spends (and often wastes) it.
As someone else said, it's a giant Ponzi scheme. We are not funding our retirement. We are funding our parents retirement. For us to benefit, the generations below us need to also contribute to the scheme. Most folk under 30 that I know in the public sector cannot afford to pay into their pension, so it's already looking shaky.
Disclaimer: I'm no financial adviser however so please do not take this as financial advise.
Interesting thought there, another reason I'm staying out then :p
i want to comment......., but this government, well.........