To Save or Not To Save….

One aspect of this current general economic downturn that is slightly concerning me is the recent changes to the base UK interest rate, reduced today to an all time low of 0.5%. My concern here is admittedly self serving, I am now (thankfully) in a situation financially where I have the ability to save a reasonable amount of money, but am now faced with steadily decreasing interest rates available to me.

This is clearly an issue, as as soon as the interest rate you are gaining drops below that of inflation, you are essentially losing value in your savings, simply by letting them sit there. Now the question is, is a savings account of a useful interest rate an unreasonable thing to ask for at the moment? I’m not too sure, but thankfully, I think we have managed to secure a 4% savings rate with ING (once we get the documentation sorted out that is) which means that at least our money won’t decrease in value, even if it doesn’t increase.

Some people are generally not too pleased with this development, and fairly so – one of the supposed effects of this cut will be that people will be more encouraged to spend and/or invest, as opposed to simple savings, increasing cash flow and general economic liquidity – at least that’s the theory, but then why should we be being MADE do spend our money in ways that we do not want to?

I can understand the logic, but then what are the options?

  • Property? Still decreasing, and even if that was an option, if there are no savings accounts to utilise to get together the deposit, doesn’t that exclude a fair number of people, and only help the cash rich?
  • Shares? Still dropping as well – and although it is true that shares and investments, over a broad spectrum will in the long term be profitable, this doesn’t allow for the security of the funds and so on.

What else is there? I’m not too sure to be honest.

Jason Gilbert Written by:

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