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How To Stop My Savings From Benefiting The Housing Market?

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I have a fair amount of money in savings accounts with large UK banks. Assuming I want to keep it in cash and Sterling, where can I move it to so that those banks don't get the benefit of that capital to lend against? I know the practical difference would be small, but it would make me feel better...

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I have a fair amount of money in savings accounts with large UK banks. Assuming I want to keep it in cash and Sterling, where can I move it to so that those banks don't get the benefit of that capital to lend against? I know the practical difference would be small, but it would make me feel better...

I also hate the idea that banks are using our money for mortgages.

What about commission free sterling traveller's cheques?

If they are lost or stolen don't you get them replaced so it's not as bad as having money under the bed?

Is it any better that you give Lloyds your money to start with?

There is also no commission charge when buying Sterling Travellers Cheques over the phone but in a branch you will be charged 1.5% commission - minimum £3.

http://www.lloydstsb.com/travel_main_page.asp

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What about commission free sterling traveller's cheques?

Um, thanks, but I was hoping not to lose all my interest!

What do NS&I do with the money in their savings accounts?

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Um, thanks, but I was hoping not to lose all my interest!

What do NS&I do with the money in their savings accounts?

It was the "cash" bit that threw me. I thought you meant it was going under the bed if nobody came up with a suggestion, so you weren't bothered about the interest.

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How are they going to pay you any interest if they're not going to lend it out?

I'm happy for it to be lent out, just not for mortgages.

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They give it to the government who spend it carefully.

Ah, you're right:

http://www.thisismoney.co.uk/savings-and-banking/article.html?in_article_id=456781&in_page_id=7 says "Besides gilts, there is another way of 'lending' to the Government - National Savings & Investments. NS&I's role is to reduce the cost of gilts to the Government by providing alternative funding and it has attracted £85 billion to its range of savings accounts, with new money pouring in at a rate of £12bn a year."

That might just be the answer, then. In fact, we should start a campaign to get everyone to move all their money out of banks and building societies and into NS&I.

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Why cash? How about something with high liquidity on the stockmarket? If you consider shares too risky you can buy funds at different levels of risk, and most of them are highly liquid (you can convert to cash at any time without penalty). Or consider a high-grade corporate bond - lend your money to a company you approve of and take much less risk than buying shares.

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Why cash? How about something with high liquidity on the stockmarket? If you consider shares too risky you can buy funds at different levels of risk, and most of them are highly liquid (you can convert to cash at any time without penalty). Or consider a high-grade corporate bond - lend your money to a company you approve of and take much less risk than buying shares.

I'm risk averse and know virtually nothing about investing. If there are safe non-cash investments, though, I could be interested. Presumably it wouldn't be sensible to put all my money in a single bond, so I'd have to find several different ones I was happy with. Where can I find details of these bonds?

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I'm risk averse and know virtually nothing about investing. If there are safe non-cash investments, though, I could be interested. Presumably it wouldn't be sensible to put all my money in a single bond, so I'd have to find several different ones I was happy with. Where can I find details of these bonds?

Lending to a big and profitable company is relatively safe, though the market sometimes makes a mess (lending to banks was supposed to be safe, but look what happened). The real risk is not that the company goes bust and you make a big loss, but that interest rates rise and you make a small loss as the price of the bond goes down. Price movements are small compared to shares (let alone gold or houses), and you'd expect that kind of loss to be wiped out by the interest itself over the medium term. An example of low-risk lending is our water and power companies, who borrow a lot of money to build infrastructure (utility company shares are considered safe, but if a company was in big trouble then shareholders would lose everything before bondholders lost a penny).

The most usual way to invest in bonds is through a fund which holds a basket of them. A good place to buy and sell funds is Hargreaves Lansdown.

Having said all that, bond prices are historically high, because other low-risk places to put your money have had the interest wiped out (and is money in the bank really any safer than money lent to National Grid?) So now doesn't look a great time to put money into bonds, and could turn out to be a very bad time. I'm happy to have a few squid in bond funds, but I don't expect to add anything beyond the monthly drip-feed while we're in interest-rate standoff.

Edited by porca misèria

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relatively safe

OK.

The most usual way to invest in bonds is through a fund which holds a basket of them. A good place to buy and sell funds is Hargreaves Lansdown.

Thanks.

So now doesn't look a great time to put money into bonds, and could turn out to be a very bad time.

So cash for now, and watch for bonds to become cheaper?

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What about just opening a goldmoney and a bullionvault account, sticking some in those and the rest in the new inflation linked national savings certificates that are supposed to be coming out.

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How about peer to peer lending e.g. I use funding circle (businesses) and zopa (individuals), or something like triodos bank (http://www.triodos.co.uk/en/personal/savings-overview/triodos-saver/online-saver-plus/for-who/ - not covered by uk FCSS by the way)? The system is completely interwoven but may still get you closer to the ambition.

I'd say, similar issues of interest-rate sensitivity as investing in bonds. With (much) higher risk.

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I have a fair amount of money in savings accounts with large UK banks. Assuming I want to keep it in cash and Sterling, where can I move it to so that those banks don't get the benefit of that capital to lend against? I know the practical difference would be small, but it would make me feel better...

The difference wouldn't be small, it would be zero. Exactly zero. Banks are not deposit-restricted in making loans, mortgages included. Money is fungible; if you withdraw your deposit from a bank, and then buy a corporate bond for example, the company will deposit the cash to another bank (could be the same, doesn't matter), then the two banks will buy or sell the needed funds at the end of the day in the inter-bank market (banks with funding needs will buy the cash, those with excess funds will deposit them). Net result zero. From an accounting point of view, withdrawing your cash reduces the bank's balance sheet by reducing cash on the asset side and deposits on the liability side, and the end-of-day offsetting transaction will do the opposite, raise cash in the interbank market and increase liabilities accordingly. Bottom line, functionally you are making zero difference.

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The difference wouldn't be small, it would be zero. Exactly zero. Banks are not deposit-restricted in making loans, mortgages included. Money is fungible; if you withdraw your deposit from a bank, and then buy a corporate bond for example, the company will deposit the cash to another bank (could be the same, doesn't matter),

Not true. The money invested in a company is working towards that company's business.

It might work its way back to a bank. But its gone into economic activity en route: employing people, buying supplies, growing the business, developing new products, etc. That's precisely the opposite of sinking it in property (or other unproductive) speculation.

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Not true. The money invested in a company is working towards that company's business.

It might work its way back to a bank. But its gone into economic activity en route: employing people, buying supplies, growing the business, developing new products, etc. That's precisely the opposite of sinking it in property (or other unproductive) speculation.

Obviously, but a company's financing needs and their investments will not change by transactions in the bond secondary market. At the end of the day if they need more cash they will go to the market, if they have excess cash they will deposit it with a bank. If they want to invest (real productive investment) they will do it; financing is a separate concern. Unless you are talking about a collapsed system where companies don't have access to financing and you are going to change that by providing it to them, which is not the case.

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  • 284 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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