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You are though. A savings account last year was getting you 1% or so. You can get 4% now. So if Granny has £200k she’s gone from £2k a year to £8k. That’ll cover your food and heating bill rises no bother, and she’s probably not out buying a new car or a clothes or whatever else.
Assets m8. That’s what separates rich from poor and what they’re trying to trick you to not buying. Lease a car instead of buy one, Spotify instead of CDs, rent Microsoft office’
“Hey! Why buy stuff! Possessions are so millennium! Live for today!
Oh. Sorry, it’s tomorrow now and you can’t stop paying or we take your car, software and music away because it’s ours not yours you pleb.”
Hefty-
Granny has £200k
Granny is cash rich.
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A granny who has 200k to spare would be foolish to put it in a savings account.
4% is pathetic compared to a decent mutual fund, even an index fund. -
You are though. A savings account last year was getting you 1% or so. You can get 4% now. So if Granny has £200k she’s gone from £2k a year to £8k. That’ll cover your food and heating bill rises no bother, and she’s probably not out buying a new car or a clothes or whatever else.
The gap between interest and inflation is a problem if you are living off your capital.
Gangsta Granny has 200k from the sale of some jewels she happened to come into her possession. At todays prices she needs 10k/year to pay for blue rinses and Werther's Originals. If interest rates and inflation are both zero she will spend all her capital in 20 years. If she gets 4% interest but inflation is 10% she is out of sweets after 15 years.
Of course living longer than 15 years may be out of the question without some will timed medical interventions that were missed when granny couldn't get seen by her GP.
snottyotter
davidual
jellybaby
It's not good if you are asset rich but cash poor. Eg a retired home owner planning to live off cash assets which are not increasing in value as fast as your bills.
Of course you can equity release or downsize or something but you still aren't going to be happy with the higher interest rates.