Savers money flows out of UK into Ireland.
- 2 October 2008 08:016898Ireland was for quite a while riding high on the crest of an economic wave...all was sumptious and wonderful, with money and cash aplenty...but then as with many countries around the World, fell foul of the American financial crises..and now as a nation has gone officially into recession.
A real case if ever there was one of boom and bust...and here you have it, and this is a scoop... nothing at all to do with Gordon Brown.
However despite economic gloom and downturns, only this week the government in Ireland announced that it would categorically guaranteee all depositors money in Irish Banks. A brilliant move and a total re-assurance for all..small savers, big savers. The kind of economic security for savers needed here.
TV pundits immediately asked our politicians here, why cant we do it here??...politicians went into headscratcher mode with that standard bewildered look and huffed and puffed.
The upshot of this is that hundreds and maybe thousands of UK savers are now looking to transfer their savings from here to Irish Banks..as all their money will be safely guaranteed. Radio 4 said that the amount of movement was so large it caused a tempoaray suspension.
Isnt that a fairly dreadful position for the UK to be in..where the average Joe in the street has to transfer his cash to a foreign country to keep it safe.email: dover7@msn.com - 2 October 2008 08:316901Imagine the anger in Ireland if an Irish Bank goes bust and British investors get paid compensation by Irish taxpayers.
What people must remember if they put money in an Irish Bank, is currency risk. That can only be avoided if they use a sterling denominated account but take care, the interest rate may be worse and it is possible that these are excluded from the compensation package by the small print (which I have clearly not seen).
People should not panic, just make sure that no more than £50,000 is with any single deposit taking institution (take care over groups). National Savings accounts can be used if people are very worried, but the interest rate is low and below inflation returns can be expected, so your money will fall in value. NS Certificates can also be used up to the limit of £15,000 per issue, the index linked certs offer 1% above inflation but you should not encash them early.
The point is this. There is no such thing as being totally risk free with money. There are only different types of risk. You minimise risk and maximise opportunity through good diversification. Diversification can mean many things and is much more than spreading your money around.
If you really are worried, just get some good advice. Make sure it is fee based because there are still many commission only sharks out there who are facing the lowest business levels for 20 years and could be desperate. Getting advice is the best thing you can do. - 2 October 2008 11:396913Thanks for that excellent info there BarryW.
It does seem such a shame when people have accumulated some savings over the years that it cannot be declared totally safe.
Its hard enough accumulating a few bob over the years, but with the prospect of losing it through no fault of their own, its no wonder people are panicking a wee bit. Faith has been lost in the system. The Irish guarantee has proved massively popular with all Irish investors as you can imagine.
One other bummer with savings difficulties... I always think its a real shame that the IRevenue tax the few measly bits of interest the average guy in the street gets from a lowly Building Society a/c or whathaveyou. I mean...the Government encourage you to save for your own well-being, then they tax the few miserable 3 or 4percent given to you. Talk about having your cake and eating it, no cake though for the humble saver.
I know there are Isas and Peps and so on for the organised, but clobbering the humble BS account for the ordinary Joe seems unjust.email: dover7@msn.com - 2 October 2008 11:526916If you are just getting those rates PaulB then you should see me. I agree it is wrong that GB reduced the levels of tax free savings available to people.
Before 1997, in total over a 5 year period, you could invest up to £54,000 tax free in a combination of General and Single Company PEPs and TESSA. GB changed that so in a period of 5 years you could only invest a total of £35,000 tax free. The £7,000 annual ISA allowance set 10 years ago has risen only to £7,200 just this year. In addition he reduced the tax benefits through initially a reduction and then abolishing the dividend tax credit for equities. This has devasted savings.