Is There Any Point In Saving Money?
With interest rates at the lowest they have been for centuries, savers are feeling very hard done by. They have good reason to feel that way as they have been doing the right thing. All through the credit fueled consumer boom there were voices calling for us all to save more towards our pensions and many people did continue to save for the future.
Those savers now feel they are being punished for the carelessness of others and they have a good point. Unfortunately the solution to the problems created by the madness of the credit powered consumer boom seems to mean that savers get punished more than the borrowers as they see returns from their savings drop to almost nothing.
So, is it a waste of time to save spare cash? No way. This is an exceptional period of time we are living through and things will turn around at some point. Interest rates will riseand get back to more normal levelsand what is more, I believe, the saver will become a more important and valued customer in the future.
Banking and finance have to change and governments around the world are looking to improve the behaviour of the banking industry. Politicians, with a few notable exceptions, tok credit for the consumer boom but ignored the costs and consequences which we now see all around us.
Having recognised that you can’t allow a fox to run the henhouse, or bankers to be trusted to behave sensibly where money is concerned the regulations will be tightened up and banks will become more boring places as they were once before.
The savers will once again be considered important because they will be the people providing the funds for the banks to lend out. Whereas we have had a few decades where the borrower was seen as the most important customer we may now, at last, see the saver valued, by banks and governement, as the important person they are.
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Comments
Interesting to come back to this post now 5 months later and see that the FTSE100 now stands at 5082 – this is an increase of 27.1% since my lost comment in April.
Did anyone invest back then?
I bet you’re smiling now! However, this is a short term position and the stock market can now go of two ways – up or down again!!
Hi Simon, Yes it was a good time to invest and those who held their nerve should have recovered a lot of what had been lost on paper.
Hindsight is a wonderful thing and it seems obvious now but at the time I expect a lot of people were nervous about losing even more money and either sold their shares or chose not to invest in the stock market for a while.
As you say they can still go either way, up or down and there seems to be a lot of different opinions about which one it will be in the near term.
My own personal thoughts are that with the FTSE100 currently sitting around the 4000 mark then long-term regular savings into say a UK Equity fund might be a good idea as long as you are prepared to commit to this being a long term investment!
The last time the FTSE100 was at this level was back in 2003 and prior to that it was in 1996 – in this case then time travel is possible!