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Low rates on children's accounts 'discouraging saving'
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Author:  Amnesia10 [ Sun Jul 24, 2011 1:02 pm ]
Post subject:  Low rates on children's accounts 'discouraging saving'
http://www.bbc.co.uk/news/business-14256919

Quote:
Consumer group Which? says some of the interest rates offered on children's savings accounts are discouraging parents from investing in their futures.

Its survey shows that on average children's instant access savings accounts offer rates of just 1.1%, and as low as 0.05%.

The worst rate uncovered was for First Trust Bank's Junior Saver Account.

First Trust said it was now reviewing the account.

It added that a new pricing structure would be communicated to customers in the coming weeks.

Which? wants more banks to follow suit and review their rates.

When you consider that the financial crisis was caused by a lack of savings this will create problems for future. It is why interest rates need to go up.
Author:  veato [ Sun Jul 24, 2011 6:30 pm ]
Post subject:  Re: Low rates on children's accounts 'discouraging saving'
We started saving for Emily shortly after she was born and the rates were generally crap. We're still saving though as I presume by the time she wants to go to uni it will cost $1m. A day.

The best we found was a Halifax regular saver but it only lasts for a year. After that point the funds accumulated are transferred into a standard savings account. I think (and I think it ended this month) that we can then have another 12 month regular saver... and so on.
Author:  Amnesia10 [ Sun Jul 24, 2011 7:07 pm ]
Post subject:  Low rates on children's accounts 'discouraging saving'
It is pretty much a scam by banks. They get ultra cheap funds, but still sting the public with 20% plus for any borrowing. Longer term kids will not bother saving if they see no benefit. Why not just keep it in a a jar?


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Author:  hifidelity2 [ Mon Jul 25, 2011 11:20 am ]
Post subject:  Re: Low rates on children's accounts 'discouraging saving'
veato wrote:
We started saving for Emily shortly after she was born and the rates were generally crap. We're still saving though as I presume by the time she wants to go to uni it will cost $1m. A day.

The best we found was a Halifax regular saver but it only lasts for a year. After that point the funds accumulated are transferred into a standard savings account. I think (and I think it ended this month) that we can then have another 12 month regular saver... and so on.


IF you are saving long term(say for uni fees / house deposit) then you would be better putting the money into some from of Unit trust as there is in the long term the place where you will gte growth esp over say 15 years

My grandmother did that when I was born - she put in a lump sum into a unit trust and over the 25 odd years it grew enough to pay for the deposit of my 1st house
Author:  Amnesia10 [ Mon Jul 25, 2011 4:31 pm ]
Post subject:  Re: Low rates on children's accounts 'discouraging saving'
hifidelity2 wrote:
veato wrote:
We started saving for Emily shortly after she was born and the rates were generally crap. We're still saving though as I presume by the time she wants to go to uni it will cost $1m. A day.

The best we found was a Halifax regular saver but it only lasts for a year. After that point the funds accumulated are transferred into a standard savings account. I think (and I think it ended this month) that we can then have another 12 month regular saver... and so on.


IF you are saving long term(say for uni fees / house deposit) then you would be better putting the money into some from of Unit trust as there is in the long term the place where you will gte growth esp over say 15 years

My grandmother did that when I was born - she put in a lump sum into a unit trust and over the 25 odd years it grew enough to pay for the deposit of my 1st house

Probably would not work now as the stock market has been stagnant for a few years.
Author:  hifidelity2 [ Tue Jul 26, 2011 11:47 am ]
Post subject:  Re: Low rates on children's accounts 'discouraging saving'
NO the market has been OK and dont forget that the return is based not only on the increase in a share price but the reinvested dividends
http://www.money.co.uk/unit-trusts/all-unit-trusts.htm
Author:  koli [ Tue Jul 26, 2011 1:15 pm ]
Post subject:  Re: Low rates on children's accounts 'discouraging saving'
If you get 0.05% interest then you haven't done your homework and you get what you deserve - 0.05%.

Yesterday the libor rate for 12 months was 1.58781% so asking for more than that is really pointless and 1% is acceptable return from that point of view. Why would a bank borrow from you if it can get money cheaper elsewhere? Do YOU pay more than you need to for goods and services?

You also need to realise that when investing you get compensated for the risk you take. That's why returns from shares are higher than from keeping money in the building society. In my eyes 10 period year is long enough to invest in shares so it makes sense when saving for a child.
Author:  Amnesia10 [ Tue Jul 26, 2011 1:32 pm ]
Post subject:  Re: Low rates on children's accounts 'discouraging saving'
hifidelity2 wrote:
NO the market has been OK and dont forget that the return is based not only on the increase in a share price but the reinvested dividends
http://www.money.co.uk/unit-trusts/all-unit-trusts.htm

Dont forget that those figures do not necessary include charges. In fact the charges can be so large that the funds in reality are falling. If you have a 2% management charge for the fund that eliminates much of the gain when compounded.
Author:  hifidelity2 [ Wed Jul 27, 2011 10:46 am ]
Post subject:  Re: Low rates on children's accounts 'discouraging saving'
Amnesia10 wrote:
hifidelity2 wrote:
NO the market has been OK and dont forget that the return is based not only on the increase in a share price but the reinvested dividends
http://www.money.co.uk/unit-trusts/all-unit-trusts.htm

Dont forget that those figures do not necessary include charges. In fact the charges can be so large that the funds in reality are falling. If you have a 2% management charge for the fund that eliminates much of the gain when compounded.

True but then that what the tables from quality papaers / various money web sites are for - telling you which have the lowest charges
Author:  Amnesia10 [ Wed Jul 27, 2011 11:35 am ]
Post subject:  Re: Low rates on children's accounts 'discouraging saving'
hifidelity2 wrote:
Amnesia10 wrote:
hifidelity2 wrote:
NO the market has been OK and dont forget that the return is based not only on the increase in a share price but the reinvested dividends
http://www.money.co.uk/unit-trusts/all-unit-trusts.htm

Dont forget that those figures do not necessary include charges. In fact the charges can be so large that the funds in reality are falling. If you have a 2% management charge for the fund that eliminates much of the gain when compounded.

True but then that what the tables from quality papaers / various money web sites are for - telling you which have the lowest charges

I actually think that unless you have an actively managed fund that suits your needs the charges are excessive much of the time. I think straight forward ETF's with charges of around 0.1% or less are the way of the future. Since most fund managers are not able to beat the market consistently this offers better returns and much lower charges.
Author:  koli [ Fri Jul 29, 2011 11:52 am ]
Post subject:  Re: Low rates on children's accounts 'discouraging saving'
koli wrote:
Yesterday the libor rate for 12 months was 1.58781% so asking for more than that is really pointless and 1% is acceptable return from that point of view. Why would a bank borrow from you if it can get money cheaper elsewhere? Do YOU pay more than you need to for goods and services?

Ok, I did some research and found out that money market fund that belongs to Blackrock bought certificates of deposit in RBS and Lloyds with six month maturity at levels of 1.08% and 1.12% respectively.
And we are talking about very low cost, institutional scale trades here. Press couple of buttons on the computer and it's done. No need to mess around with costly saving accounts, ISA and archaic deposit books.

So those complaining about low rates don't really have a leg to stand on...
Author:  Amnesia10 [ Fri Jul 29, 2011 12:53 pm ]
Post subject:  Low rates on children's accounts 'discouraging saving'
Yes but many here will remember savings rates of 8% or more.


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Author:  hifidelity2 [ Fri Jul 29, 2011 3:27 pm ]
Post subject:  Re: Low rates on children's accounts 'discouraging saving'
Amnesia10 wrote:
Yes but many here will remember savings rates of 8% or more.


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Which you can still get on some regular savings accounts (ideal for Children)

http://www.hsbc.co.uk/1/2/personal/savings/regular-saver
Author:  koli [ Fri Jul 29, 2011 9:40 pm ]
Post subject:  Re: Low rates on children's accounts 'discouraging saving'
Amnesia10 wrote:
Yes but many here will remember savings rates of 8% or more.

And we all know how that ended up, Icelandic banks and all!
And we are still paying for those morons who put money in them only to be bailed out by the UK government because Iceland showed us a finger and refused to cough up for insured deposits!!
Author:  Amnesia10 [ Fri Jul 29, 2011 10:51 pm ]
Post subject:  Re: Low rates on children's accounts 'discouraging saving'
koli wrote:
Amnesia10 wrote:
Yes but many here will remember savings rates of 8% or more.

And we all know how that ended up, Icelandic banks and all!
And we are still paying for those morons who put money in them only to be bailed out by the UK government because Iceland showed us a finger and refused to cough up for insured deposits!!

I was talking of years ago before the rates fell. This would be from an ordinary deposit account. Not a regular savings or special terms account.
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