Thank you all for putting me right re: interest-only mortgages. I don’t expect ever to take on a new one but clearly my knowledge is out-of-date. These days I’m more worried about the kids’ mortgages … not this interest rates but the eye-watering loans.
I, too, recall interest rates being hiked … I cancelled an appointment I had made at the local Volvo dealership to look at a new car the day after the news broke. Dour days …
If you’re serious about not wanting to die rich then you should consider moving to the US. You can easily dispose of a few $ million treating medical conditions related to aging.
or on a 5-year NHS wailing list!
Remember though, that a low return in a low inflation economy is probably better than a higher return with high inflation.
You want just enough inflation, hence banks aiming for 2% or so. If it’s too low people defer expenditure and the economy shrinks. My work pension is increased by the September CPI, so we want a big spike in September and then a fall!!
Yes, absolutely.
I’ve lost count of the number of people wishing themselves back to the halcyon days when they got 10% on their savings. Having to then remind them ‘…yes, but inflation was at 15!’
Careful what you wish for.
Basic economics I’m afraid. Higher interest rates on savings only reflect trouble elsewhere, higher inflation or higher debt rates. And higher debt rates lead to higher inflation (and this is bad inflation rather than good inflation).
Wishing to get a useable income from cash, at least over anything but the short term, is just alchemy. It doesn’t work.
You will get poorer.
‘I thought I was mistaken and I thought I heard your words…’!
And for a lot of pensioners or older folk who don’y have index-linked pensions that would be a disaster
Interest only is fine as long as you’re clear about how to payoff the loan at the end of the mortgage which could be many years away, I personally would never recommend or consider interest only YMMV. I had a low cost endowment mortgage from Scottish widows which I paid off from redundancy payoff (age 52) thankfully. The endowment eventually paid out less that half the mortgage. On top of this I also had an AVC with equitable life 
.
Not normally with the same provider - you might have a chance if you shop around - but not straightforward
Once an interest only period expires typically after 5 years - they switch you automatically to principal and interest
Ouch, once upon a time I was the National Accounts Manager for the Employee Benefits division of a major insurer, part of the job was interacting with analysts from the major actuarial and consultancy firms
One guy (probably one of the most methodical I met ) was fired for repeatedly expressing concerns about Equitable Life, they had no shareholders and paid no commission - but did have sales staff who were very well rewarded.
Given the scale of the payouts , it was hard not to wonder about them, but they were the largest provider of in-scheme AVCs
I was on an Equitable Life AVC scheme before I took early retirement. 6 months or so after I retired Equitable Life expired.
I would have had worked for many years to recover from the EL loss should I kept working.
With EL, it wasn’t just the staff rewards but also their growth forecasts et al were ahead of market, such that many suspected things weren’t quite what they seemed but while the train rolls on, proving it is very difficult. Sadly, one of their main marketplaces was the sole director/partner/self-employed segment, where the effects were likely to be hard-hitting.
This evidences one of the key issues with regulation in that any action taken is normally a ‘no win’, as you either hasten a demise by calling things early (with unknown consequences) or leave things and see if repair can be effected, but where the wreckage can be greater.
It was the EL W/P investors that got hit of course, by about 20% iirc? Another reason not to use W/P funds for sure but I’m afraid people often can’t see woods for trees etc. and most still can’t get their heads round basics like inherent and effective risk.
Sorry to sound cynical but that’s the way I’ve found it, just about every ‘complaint’ I’ve heard from people about why investing is a bad thing is from people who used W/P funds or structured products. Or they ‘got their fingers burned’ when markets fell a bit and they pulled out.
If you were in a EL unit linked fund you were probably fine (ignoring any fund performance aspect) and just moved to another manager, Halifax possibly? Can’t remember for sure these days.
Hi, no salesmen we’re involved I was transferring an old final salary pension into my then present companies final salary scheme, and a single payment avc was the only way I could do it, the company I worked for (major international telco based in Sweden) offered 3/4 avc provider options It looked like EL was most secure because it was used by the establishment MPs Judges etc! This all happened in the early 90’s.
Fortunately it had a GMP underpin so in the end I got much more out than if I had left it in my old final salary scheme, so in a roundabout way it was a good investment.
The worst investment was buying discounted company shares in an employee share save scheme in this company and my subsequent employer both what you might call blue chip companies, many employees made major contributions and subsequently major losses, fortunately my investment was small (I’m adverse to risk) moral never invest all you money in a single company even if it’s a share save scheme, shares are too much like gambling for the average person imho, as always ymmv.
There would be no direct salesmen as such, but the account managers were very well rewarded , W/P were opaque in their charging structure, unitised open.
There was a distinct move to full transparency in the mid-2000s
Tend to agree with your latter point though I often think back to a lady I met some years back who had been doing sharesave and it’s variations at Tesco since the year dot, when they first offered her them.
She literally had no idea what these were worth to her at the time, though she figured they would be a little nest egg to help tide her through the first bit of retirement.
When we worked out that the total of everything she had in Tesco shares one way or another added up to about £150K, she genuinely thought I was making it up and was being mean to her. I had to list it all out for her before she realised what she had.
Fortunately, the first thing she then said was she’d best have it out then, which we did over a period of time using her tax breaks, as I think now the share price is probably half what it was then.
I’d like to think so, however most WP funds remain as transparent as your average Black Hole.
It’s called actuarial discretion 
It was originally designed to smooth returns … but the returns turned into a marketing ploy with SL/EL being amongst the worst culprits .
My endowments (managed by my employer) covered my mortgages and were prudently managed but we were far from glamorous