Why invest at all when fixed-rate savings account are so high? [6-month "update"]

[betty129]

@julie121 He can’t live in an index fund while he “builds wealth”

 

[julie121]

@betty129 Your point was he didn't have the capital and you tried to imply stocks have poor returns despite outperforming property for the past century.

He can’t live in an index fund

He can buy them while renting though, which absolutely can be more profitable depending on your situation. Currently renting is cheaper than buying on average with the current interest rates. Mortgage repayments are up roughly 33%, rents only 10%. Combine the costs of buying like solicitors fees, surveys and stamp duty and buying right now makes little sense.

 

[betty129]

@julie121 Good god another one

Dude, 100k in capital invested in index funds will not accumulate wealth for a standard rate taxpayer with barely any other sources of income when they spend 3k a month on rent ffs

 

[julie121]

@betty129 You've conveniently left out this clown has no job and is spending 3k in rent until now, good one. Either way, all your points have been pretty baseless.

 

[ieltsielts]

@david_thesalmst Everyone is a genius in a bull market.

Remember that.

 

[justin017878]

@ieltsielts And everyone else is a genius during a crash calling people who are 300% up since they started investing idiots because the market crashed by 30% and now they're "only" up by 210%.

Remember the markets aren't up by 10-11% some years and then have big crashes, they're up 10-11% on average inclusive of the big crashes so a down year after a bull run isn't exactly some reason to poke holes in an investing strategy, it's entirely expected and still leaves you miles ahead of any "safe" return.

 

[julie121]

@ieltsielts You don't have to be a genius to know stocks have outperformed cash and bonds for a century.

 

[gdoll18]

@david_thesalmst Are you counting total returns here?

E.g. an accumulating FTSE 100 ETF will have gained about 2.7% over the past six months.

 

[tinglee0021]

@gdoll18 My isa with Chase is 4.1% risk free so it's very tempting to just load that up

 

[jhillaire84]

@tinglee0021 If you shop around you can get just over 5% also with FSCS protection.

 

[tinglee0021]

@jhillaire84 Yeah maybe. I'm more concerned about my childrens' accounts. They're just 2.5% and haven't changed in 4 years. I feel like I could be doing a lot better with them

 

[everthing4family]

@tinglee0021 Saffron Building Society Children's
Regular Saver (5.8% AER fixed for 12
months) up to £100 per month

Halifax Kids Monthly Saver (5.5% AER
fixed for 12 months) min £0 / max
£100 a month

HSBC MySavings (5% AER on balances
up to £3,000 | above this amount you'll
only get 2.25%: min £10

Nationwide FlexOne Saver (5% AER
variable on up to £5,000 saved)

 

[tinglee0021]

@everthing4family Thanks a lot. It wouldn't be possible to transfer them right? Just stop adding money and open a new account is best?

 

[everthing4family]

@tinglee0021 A child's account? In all honesty, I don't have kids, so I haven't looked into it, but I don't see why you wouldn't be able to transfer it the same way you would a regular account. Somebody else will probably know better than I do.

But yes, I personally would change any additional deposits to go into one of those accounts earning 5%+ rather than the 2.5% you're earning now on anything you deposit.

 

[reverendfathertyler]

@tinglee0021 JISA or JSIPP (Children's Pension) is another option (pension if you want to protect them past 55 and think they may piss all the savings up a wall when they're 18 when they get access to the JISA)

Invested in global all world type funds like Vanguard or Blackrock should be safe enough as they'll have 15+ years to ride out any sudden drops like 2008 (JSIPP you'd be talking 50 years)

Unless the world economy goes down tomorrow and never recovers (in which case we've all got bigger problems) the couple quid you sling away into it would be outperforming any savings account for children by far. That's all they're doing with the money from the savings account anyway, they just give you a set amount as promised and keep the rest as profit.

 

[upaxgunxgrave]

@tinglee0021 Remember that children's accounts outside ISAs are taxable as the parents' income over £100 if the money ultimately came from the parent

 

[megannn1]

@tinglee0021 That's not an ISA, just a regular savings account.

 

[dutyhonorcountry]

@david_thesalmst Gotta diversify yourself bro, bit of this bit of that

 

[wondering1985]

@david_thesalmst Aren’t savings accounts taxed as income vs investments as cap gains?

For some people that’s 45% vs 20% tax.

 

[ebmommypayne]

@wondering1985 No tax on your S&S ISA too