Possibly, possibly

Savers are putting away twice as much cash as they did last year as they make the most of rising rates.

The Building Societies Association (BSA) said that savings balances at building societies increased £8.4 billion in the three months to October — double the £4.2 billion that was saved in that period last year. It was also 80 per cent more than the £4.7 billion stashed away in the three months to July.

“It looks as if those who are able to are building their savings buffers, while rising interest rates and turbulence in other investment asset classes make cash savings attractive,” said Robin Fieth, the chief executive of the BSA.

Also, possibly not. Income and substitution effects. Weirdly, we do often see people increasing their cash savings as inflation rises. Because that future money is worth less, so more must be saved to smooth lifetime incomes.

Weird, but there we are.

9 thoughts on “Possibly, possibly”

  1. So what should one do with uncommitted cash? I for one don’t like the rates available on any kind of deposit. Buy stuff I don’t need before the price goes up?

  2. TBH – and not, obviously, actual investment advice – stick it in a high divvie stock like ‘baccy. 8 and 9% yields in that and a damn good chance the stock price will keep up with inflation too.

  3. It also depends what they mean by ‘savings’. Deposits have to be held somewhere. The alternatives are actual cash (lol) or maybe other accounts – current, business etc (if those aren’t ‘savings’). This is only building societies, so you could also bank elsewhere. None of these tell you about the attractiveness of savings vs investments.

    For anyone who doesn’t want a paywall for a regurgitated press release: BSA Announcement

  4. Tim, since you posted here that Shell was keeping up dividends and might be a good idea in a low interest world, while NOT giving advice, of course, it has paid me around 4%. The price has gone up about 120%, so good one.

  5. Given that equities are turbulent and there is widespread expectation of recession and inflation makes bonds less attractive people may be parking their money temporarily. Also, given expectations of recession people may be saving a bit more against the fear of unemployment and other economic stress.

  6. Some time ago I said that I was contemplating an anti-woke portfolio. Baccy, booze, oil, gas, coal, uranium, armaments, usury …

    “What had I missed?” I asked. A kind soul pointed to betting. Anything else missing? (Sugar? Don’t say cryptocurrency!)

    Tenanted housing is too risky for my tastes. The coming Labour government will introduce rent controls and possibly confiscations.

    I suppose that once the nation twigs the damage the Covid vaccines wreak Pharma might become pretty anti-woke (if it isn’t already).

  7. @Dearieme
    Copper & other industrial metals – all of those wind turbines and electric cars mean a lot more extraction will be needed before they realise net-zero by 2050 is impossible and throw in the towel.
    There’s a bloke called Simon Michaux who’s done some work on this recently.

  8. I wonder where the extra savings are coming from – perhaps from tax-free lump sums taken from pensions? Pay off your mortgage and put the extra into a savings account?

    From an article in yesterday’s FT – an interviewee said:

    “Watching the older generation being shoved into the care home Protective Ring and abandoned to Covid brought a strong realisation that I was looking at a possible version of my future”. The interviewee took early retirement “to thoroughly enjoy my remaining time”. 

  9. Also more must be saved to cover 2023’s gas and electricity bills – saving for retirement is less urgent.
    But the massive publicity (e.g. in the “Financial Times” which should know better) about “better rates on savings” which are -8% or worse in real terms, has very probably encouraged more people to put their spare cash in a building society at the expense of their current account in Barclays, Lloyds, NatWest etc

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