uncle_monty

Fair enough.

The other was the premise of my OP. You decided to apply this simple post to a mythical invester (sic) with £100k balance to which it clearly doesn't apply. In terms of maths, I've repeatedly said to both you and Redhat to run the numbers in excel. Pounds, shillings and pence reveal themselves there, proving my 4% on monthly incremental savings is correct as stated in my OP. Do you understand? Do you disagree? Thought not. What a waste of time. This is bordering on trolling now. :angry:

Sigh........ Wrong, wrong, wrong. I'm not being "forced to drip feed" any money through, which is the point of my premise. Each month a small portion of my current monthly earnings goes into monthly savings @ 4%. The cash balances (i.e. lump-sum savings) are already allocated! For simplicity (assuming 1 regular saver @4%): Month 0: Reg Saving Balance (£0 @ 4%), plus other cash saving (£0 (because I'm not drip-feeding balances, rather monthly actual earnings)@ 0%) = £0 Month 2: RSB (£250 @4%), plus £0 @ 0% = £0.83 Month 3: RSB (£500.83 @4%), plus £0 @ 0%) = £1.67 etc. Each month on my accruing balance I earn 4%. There is no opportunity cost because, aside from the 3 day transfer from salary account to regular saver, the money has only just come in to my possession. You do get that don't you? You can not calculate interest on a cash flow stream in the same way as you do a fixed balance. Banking 101. Therefore, as stated in my OP, "I earn 4% on my incremental monthly savings". Put it in excel, you will see what I mean (I can't be bothered). Monty PS Your second para is a little patronising. I have a pretty secure job that affords me a large portion of free cash flow to allocate each month. I invest in currencies, commodities, fixed income, wine, etc. (some are up over 150% this year), so am hardly pushing the boat out on a reg saver here or there. Like I said to Redhat Sly, just sharing the benefit of my investigations with fellow members. I hope some take up the accounts I've identified, as every little helps ward of real term losses on savings. Perhaps you could try to do something helpful to a fellow HPCer..........? PPS Also, why would I sign up to a fixed bond for such a piddling amount (3.7%), when I have near instant access to the vast majority of my GBP assets at between 4-5%? I think I'll stick my own gameplan, mate.

Every penny I deposit with Principality and Santander will earn 4%. I can't earn interest on each monthly deposit until I've accumulated it via my salary. Do you agree with that? Therefore you're calculation is incorrect from a time-value of money perspective, as you can't apportion "lost" interest to cash balances that have "yet to materialise" (thanks you Mr Bovey ). Do you understand that? Seems a pretty petty (and incorrect point) you seem to have focused on Redhat Sly. This thread is important thought-provoker for savers, and frankly you're muddying the water. Like I said, a simple spreadsheet calculation will prove me correct and you wrong. Take a look - should only take 2 mins. Monty

Incremental future monthly savings earning 4% when it is earnt. I clearly make the distinction between balances and incremental monthly savings (from incremental monthly earnings). Put it in a spreadsheet if it makes it clearer.

Wrong. Clue was in the first two lines of my OP: "We all know that saving rates are rubbish. However, below are the accounts I've opened for my available balances and some of my incremental monthly savings....." I will earn 4% on every monthly deposit I make into the future when I have earnt it. You can't count accrued interest on money you haven't earned! By contrast my large cash balances are earning 4-5% in accounts such as those listed above and other places such as M&S (4% virtually easy access).

We all know that saving rates are rubbish. However, below are the accounts I've opened for my available balances and some of my incremental monthly savings (GBP portion only). 1. Santander Homesaver (5%): Open with up to £5,000, then save up to £300pcm. You just have to i) be under 35 (??) and ii) agree to speak to a mortgage adviser upon closing the account to qualify. Variable rate, but I'd guess they won't be silly with this as they have the incentive of possible mortgage business. 2. Lloyds current account with Vantage (4%): On balances between £5-7,000. Must pay in £1,000pcm (can pay it straight out again). Again, variable, but this rate has held for a long time, so hard to see how they'd cut it now (Lloyds staff who opened it said it was "extremely popular" and that "most people would close accounts if we changed the rate". 3. Principality Regular Saver (4%) Save up to £500pcm. Fixed rate. 4. Northern Rock (3%) £5,100 1 year ISA. Fixed. Excluding the ISA, that's over £21,600 per year at between 4-5% gross. Double that if you have a partner (£43,200). And £15,600 / £31,200 of that is instant access. It won't make you the richest person in the world (especially given its GBP), but it will help minimise real losses in these inflationary times. Comments? Are there any other accounts that I've missed? Monty

The two simply cannot be compared. First growth Bordeaux is so far from Spanish, New World plonk et al, it is arguably not even wine. When it comes to fine wine it is all about year, vineyard and provenance. Outside of a handful of vineyards, you're really only buying to drink. Don't be so naive /obtuse [delete as appropriate].

Made 150% return on my investment in some of the finest 1st growth Bordeaux last year. Yes 150%. Tax free. Not sure many other investments could touch this. I'm with Nationalist on this one.

VI fightback begins. This is going to be bloody. http://www.thisislondon.co.uk/money/article-23855463-banks-must-get-house-buyers-income-proof-in-new-mortgage-rules.do

+2 In the meantime I have got hitched, moved out of central London (to suburbs) and got a new (relatively safe) job, so should be able to ride out the next few years of austerity/instability. For me, its 20%+ crash in next 3 years or bye bye London & SE. Can't justify anything longer than a 10-15 year mortgage (the days of 25/30 year mortgage, IO, property ladder-get-bailed-out-by-1970s-inflation are over) as I'm factoring little or no pension so need to look after myself in cash or other income. Midlands allows me to buy a proper family home for cash /small mortgage.

Yes, I'm convinced that debt-based asset prices will be forced to adjust in the next 3-4 years. All banks (and by extension, Western economies) are zombies otherwise. No money in the kitty for Great Bailout 2. On a related point, I just viewed 2 great properties. Both could be considered "forever" homes, but priced at £600k and £750k respectively its hard to make any case for purchasing either (50% LTV). Given the following risks over the coming years, why would anyone sign up to 25-30 years of debt slavery at such levels: 1. Unemployment (UP) 2. Interest Rates (UP) 3. Pension requirements (contributions, UP) 4. Healthcare in later years (contribution, UP) 5. Day-to-day inflation (UP) 6. Income from partner (DOWN, due to children) 7. Taxes (UP) 8. Cost of private services to replace reduced State services (UP) 9. Real wages (UP or FLAT at best) Given the above, its hard to make an investment case for house buying ATM.

We have yet to address the cause of the crisis By Conrad Voldstad Published: July 6 2010 16:29 | Last updated: July 6 2010 16:29 With the debate about US financial reform finally, it appears, about to end, should we all feel safer and more confident that a crisis will not recur? After all, the root causes of this crisis (including derivatives) have been identified and addressed. Measures have been taken to prevent system-wide bail-outs. We agree wholeheartedly with the need for financial reform and support many of the derivatives provisions in the bill. But have we addressed what actually happened in the financial crisis? Or have we left the real culprit lurking, ready to resurface and create more instability in the financial system? It’s clear today – and it was clear three years ago – that the culprit is real estate exposure. Bad lending, driven by poor underwriting standards and awful risk management, created and drove the crisis. Derivatives, of course, played a role. These financial instruments were and are a means of hedging and taking on risk. Some market participants used them to take on real estate risk. But history shows it’s not the product itself that causes crises. It’s the underlying risk discipline. The savings and loan crisis of 1989-90, the Japanese property bubble of the 1980s, and events such as the Panic of 1837 occurred at different times in different places. But what they and other crises have in common is a weakening in risk management standards and practices regarding real estate value and exposure. Looking at the 2007-09 financial crisis, a similar pattern emerges. The casualties had one big factor in common – real estate exposure – which they took on in different ways. First, consider AIG. While a large portion of its risk was taken via derivatives, there is no doubt that what turned bad was the underlying real estate risk. It also took large positions in the cash subprime market and its cash losses may well exceed whatever losses it suffers on its derivatives position. What about the other casualties? The biggest are Fannie Mae and Freddie Mac. It has just been reported that their losses so far top $160bn and they could go much higher. Then there are the two banks that had to get a second bite of government support. Both were very active creating collateralised debt obligations out of subprime mortgages and got stuck holding the bag when the music stopped. Let’s also not forget Washington Mutual and Wachovia, victims of residential mortgage problems, which no longer exist as independent entities. The investment banking industry was also feeding at the trough of the real estate lending boom. Bear Stearns was rescued but nearly $30bn of real estate exposure was left at the Fed. Lehman failed and its failure was a result of soured real estate. There’s more. Countrywide, America’s largest mortgage lender, was bailed out by Bank of America. Others, such as Indy Mac, American Home Mortgage and New Century Mortgage, died with nary a whimper. All were victims of poor residential real estate lending. There are dozens of other banks with more than $1bn of assets that failed because of real estate problems. If imitation is the greatest form of flattery, AIG certainly had its admirers. Real estate destroyed virtually the entire credit insurance industry, which diversified from insuring public finance and drove its business into the ground in the space of a year. Who are these groups? Big players such as Ambac and FGIC, and smaller ones like SCA (now Syncora), ACA and CIFG. MBIA is trying to separate its public finance business from its structured finance portfolio, the home of its mortgage business. Only Assured Guaranty is still writing business and it too has been seriously weakened by its foray into insuring residential mortgages. As incredible as it may seem, there are yet more casualties. The mortgage insurers, for example, fared just a bit better than their credit insurance cousins. But companies such as Radian Group, MGIC and PMI remain shadows of what they were. It seems strange that all these mortgage losses have not drawn the attention of lawmakers. Should we not have strict mortgage standards imposed on banks with access to FDIC insurance? How about revising the GSE’s lending standards? Surely, the non-bank mortgage lenders and originators can be regulated either directly or through management of the mortgage market itself. Regulation that focuses on markets and instruments may help. But regulation would be much more effective if it focused on risk. Regulating risk, especially real estate risk, should be the objective. The casualties of the financial crisis were not the victims of derivatives. They were the victims of poor lending and risk management, and there is no assurance these will not resurface as they have so often in the past. So the question remains: after all the effort that went into US financial regulatory reform, are we really safe? Conrad Voldstad is CEO of the International Swaps and Derivatives Association

Not sure how big a deal this really is. Based on typical figures presented on Sky just now, the average payoff for a 41 year old civil servant will fall from £72k to £60k. Cap will be reduced from 3 years salary to 2 years. This typical 13% reduction just doesn't get the job done IMO.

Interesting OS. But how will the BoE finance this? Surely this would lead to more QE and the sovereign rating downgrade/higher interest crisis?

http://beta.bbc.co.uk/iplayer/search?q=You%20and%20Yours Listening now.........

live in hope, I agree with much of what you say, particularly the failings of the previous administration (and complicit silence from HM's Opposition throughout their tenure!). However, we are where we are. As Cameron's press conference today highlights, the pain will be felt across the board. I have sympathy with those 2nd homeowners who honestly believed they were doing the right thing for their future, but they are no greater victims of this bubble than people my age or younger who have been effectively priced out of a sensible housing market as a consequence. Like I said previously, my contribution to this mess will be through higher taxes, lower services and a more volatile economic environment (wholly uncondusive to making long term decisions such as pensions and savings). Older generation's contributions will be in sharing some of their accumulated unearned assets. This is more than fair. Especially given that health care spending, a primary concern for older generations, will be ring-fenced from any real pain.

"Live in hope" I responded to you on a CGT thread yesterday. Perhaps you can address my points below? Monty "I'm afraid we are "all in this together". Why should unearned profits continue to receive very generous tax breaks in the face of the UK's great financial storm whilst modest earners lose their jobs? My preference would be CGT on non-business assets at marginal tax rate (floor at 40%), £2,500 threshold with indexation relief i.e. tax on "real" capital gains. Taper relief is a red herring. Greedy "investors" in 2nd/3rd/4th....nth homes buying for the long term or BTL speculators flipping properties between themselves for quick profits are the same in my book. BTL has been a blight on this country for over a decade. If you disagree strongly then please tell me precisely where the money for the deficit is going to come from? I accept that as I'm pretty young I will share some of the burden through higher taxes and lesser public services (i.e. my quality of life will fall over the next 10, 20, 30? years). Can't see the problem with older generations paying their share as a lump sum. Please explain how this is unfair in any way? " http://www.housepricecrash.co.uk/forum/index.php?showtopic=144428&st=15&p=2557756entry2557756

As I stated on a related thread today, the Con-Libs need every single penny. If not CGT (at least £5bn in revenue), then what other areas are there? Landlords have got a big target painted on them. It's not like they can pull the hedgie trick of threatening to go to Switzerland! I think it will take at least another 6 months for the general public to begin to realise how squarely in the poo we are. I am verging on optimism with regards to the forthcoming emergency budget. Cameron is making some good noises which suggest he wants to get a big chunk of the band news out quick and pin it on Brown. 22 June, then the comprehensive spending review are key IMO. Negative HPI (YoY) should help things along. Monty PS Out on a limb here, but I feel in my water that there may well be a decent long-term house buying opportunity towards the end of next year i.e. 25-30% off peak on selected homes. I'm planning accordingly.

I'm afraid we are "all in this together". Why should unearned profits continue to receive very generous tax breaks in the face of the UK's great financial storm whilst modest earners lose their jobs? My preference would be CGT on non-business assets at marginal tax rate (floor at 40%), £2,500 threshold with indexation relief i.e. tax on "real" capital gains. Taper relief is a red herring. Greedy "investors" in 2nd/3rd/4th....nth homes buying for the long term or BTL speculators flipping properties between themselves for quick profits are the same in my book. BTL has been a blight on this country for over a decade. If you disagree strongly then please tell me precisely where the money for the deficit is going to come from? I accept that as I'm pretty young I will share some of the burden through higher taxes and lesser public services (i.e. my quality of life will fall over the next 10, 20, 30? years). Can't see the problem with older generations paying their share as a lump sum. Please explain how this is unfair in any way?

Despite a co-ordinated campaign across the Telegraph, Daily Mail and Times, the cold hard truth continues to seep out. In The Sunday Times Business section, guesting for the holidaying David Smith, Robert Chote (Director of the independent and highly sensible IFS) lays out his views on CGT. A good read, that closes with the following: "The uncomfortable truth is that the coalition partners will have to inflict a lot of pain and disappoint quite a few expectations over the next few years as they clear up the fiscal mess they have inherited from Labour. Hopefully they will have the courage to move towards a more rational tax system as they do so, rather than simply scrambling from one short-term fix to the next." http://business.timesonline.co.uk/tol/business/columnists/article7144762.ece

Indeed. The proposal tentatively started as: 1. CGT rate (typically 40 or 50%) 2. Reduce threshold from £10k-ish to £2,500 3. No taper relief 4. No indexation relief IMO if Con-Libs have balls to implement 1. or 1. and 2. effective from April 2011, then this will contribute significantly to falling house prices. I know its a MASSIVE IF!

In today's DT there are countless anti-CGT articles. Also, there are pre-printed forms for readers to send to The Chancellor (via the DT). These forms are in both the main and money sections, so they're really throwing the kitchen sink at this. The Daily Telegraph........, protecting "hard-working" [2nd/3rd/4th......nth] homeowners/savers everywhere

The comment didn't just get the goat of HPCers. It made Merryn SW's editorial in this week's Moneyweek!

Combination of low IR, IO and international buyers (£ down 20-30%, Greek/Russian/Asian buyers) seems to be keeping Prime London HPI going. As an example I've just found out that the neighbour of a friend has just sold his flat in zone 1 for £835k. My friend bought hers (identical, I joined her on viewings for for both) £610k last summer. Equates to annual HPI of 37% There seems to be no limit to the madness in Zone 1 atm.