Start early for later

It has been said that:

Saving a small amount of money regularly from when you start work will leave you better off than saving a bigger amount in later life.

Saving is not wasting – it earns interest for the old days. This is how savings accounts work!

The lump sum grows from interest being added every year or every month.

The example shows that for Dave who left it rather late, despite of saving the same amount (£48,000) but during a shorter period, the interest rate is then proportional.

But it is worth remembering that pensions usually depend on the success of investments which, unlike savings, do not guarantee a set level of interest.

0.5% and waiting

The bank rate was left at 0.50% at the March meeting, marking exactly 2 years unchanged rates.

At the February meeting, 3 members of the Monetary Policy Committee voted for a rise – up from2 in January.

Everyone is waiting patiently to see the real outcome!

Will it go up or stay at the same level? People are struggling to invest – to save whatever kind of bank they are with – private bank or not it is the same pressure  – hope & despair.

Increasing rates slows down inflation – and it is the Bank’s job to keep inflation in check.

However,  it also increases the cost of borrowing and there are concerns this may tip the UK back into recession.

As well as the VAT going from 15% to 20%, the rate of inflation has also been pushed up by oil prices – a chain reaction!!

Financial planning is almost not possible for the time being.

According to Reuters, market pricing suggests a 10% chance of a rate rise this week.

So, a real stanby until a real decision is taken.

So why is there such a dilemma? The problem is that inflation is  higher than the 2% target. In January it was double that rate at 4%.

Some of the rise in inflation is a result of the rise in VAT from 17.5% to 20% at the start of the year, which the Monetary Policy Committee  could reasonably conclude “was not its problem“.

The committee may have decided to keep rates on hold this month,  that just means there will be even more pressure  on the outcome next month.

At the February meeting, three members of the Monetary Policy Committee voted for a rise – up from two in January.

Read more: http://www.thisismoney.co.uk/interest-rates#ixzz1GD0i519c

Each Friday is different

Always good to be up early in the morning to catch some (interesting) conversations.

Finance is a subject which is a worry for a lot of people. Taxes and more taxes. A few customers keep talking about it. Not knowing what to do or how to make their savings working correctly. Some are even thinking of private banking, in hope to get better results.

Some others are even sceptical about the entire financial system. But if you don’t try you don’t know.

Money makes the world go around…

It is understandable in a way as it is necessary for our daily lives and after the financial crisis and Christmas spendings coming up, it is not easy for everyone.  Priorities need to be done: what is essential first then according to what is left, it is possible to buy the extra items (not always needed).