Is cash king? Yes, according to a new study showing that money in best buy savings accounts has fared better than the stock market over most investment periods since 1995.
It found that investments in tracker funds would have lost money up to a third of the time, the BBC reports. But cash in a savings account always ends up higher than it started, said Paul Lewis, the author of the report. ‘People who prefer the safety of cash can make returns that beat those on tracker funds.’
House prices
The collapse in global oil prices has sent house prices tumbling in areas reliant on the UK’s North Sea oil industry, according to a new official house price index. By contrast, well-off residents of the City of London, who include the flat-dwellers of the Barbican estate, have seen their properties soar in value by more than 27 per cent in the space of 12 months, with gentrifying east London neighbourhoods such as Walthamstow not far behind.
The new government-published house price index replaces the previous indices published by the Land Registry and the Office for National Statistics. It shows that the average cost of a UK home nudged up by 0.6 per cent, or £1,300, in April to reach £209,000.
Meanwhile, more than 148,000 renting households – equivalent to 350,000 people – were put at risk of losing their home in the 12 months to April, according to a new analysis of government figures by housing charity Shelter.
The Guardian reports that people renting in the London boroughs of Enfield, and Barking and Dagenham faced the greatest risk of eviction. In each of these boroughs, one in 23 rented homes were ‘under threat’ during the period in question – which worked out as 2,314 households in Enfield, and 1,647 in Barking and Dagenham.
In the boroughs of Havering and Croydon it was one in 27, and in Ealing, one in 28, though Shelter said this was a problem that ‘stretches far beyond London’.
Pension fears
The Daily Mail reports that seven in ten savers who have taken advantage of new pension freedoms failed to shop around for the best deal. The research by charity Citizens Advice has sparked fears that millions of over-55s who opted to keep their pensions invested and use them like a bank account are being hit by high charges.
It found one in seven stuck with the same firm because they would be hit with hefty exit fees if they moved. Three in ten stayed with the same company, as they thought it was the easiest way of getting hold of their cash. And a third said they trusted their pension firm so did not look elsewhere.
In other pensions news, new analysis from investment platform AJ Bell shows that 54 FTSE 100 companies who have funding deficits on their staff pension schemes paid out a total of £48 billion in dividends a year for the past two years. This is almost equal to the total deficit of their pension schemes which is £52 billion.
Thirty-five FTSE 100 firms paid out more in dividends than their pension deficit and, more conspicuously, eight of the 20 companies with the largest pension deficits paid out more in dividends than their deficit.
The analysis raises questions over whether public companies have got the right balance between shareholder payouts and funding for their staff pension schemes.
Savvy over-50s
People over 50 have embraced using a credit card more than most people would imagine and they are very savvy about when and how to use them according to new research by Saga Personal Finance. Over 90 per cent of people over 50 say they have at least one card, with over a quarter saying they have three or more cards.
When it comes to using their card, people are switched on about the benefits credit cards give them – a fifth say that they only use their card for larger purchases to take advantage of the protection provided by the Consumer Credit Act and 6 per cent say they only use their credit card to spend abroad, presumably taking advantage of the safety a credit card gives them over cash.
Savings
Data from Moneyfacts.co.uk reveals that rate reductions in the savings market have now outweighed rate rises for eight consecutive months. In May, Moneyfacts recorded just 18 savings rate rises. Disappointingly, rate reductions over the same period completely outshone this figure, with the number of rate decreases standing at a staggering 156, with some deals falling by as much as 2 per cent.
While this is certainly bleak news, at least savers’ precious funds won’t be greatly affected by inflation: inflation statistics released yesterday show that the Consumer Prices Index stuck at 0.3 per cent during May, which means savers have little to worry about in terms of savings erosion. Unsurprisingly, the vast majority of the 815 savings accounts currently on the market (660) can beat or match inflation, and of these 600 (102 no notice, 58 notice, 249 fixed rate bonds and 191 cash ISAs) are without restrictive criteria.
Brexit
George Osborne says today that he will have to slash public spending and increase taxes in an emergency Budget to tackle a £30 billion ‘black hole’ if the UK votes to leave the European Union.
The chancellor will say this could include raising income and inheritance taxes and cutting the NHS budget.
But 57 Tory MPs have said his position would be ‘untenable’ if he tries to cut NHS, police and school spending. And Vote Leave criticised Remain’s ‘hysterical prophecies of doom’.
Meanwhile, engineering giant Rolls Royce has written to employees saying it wants the UK to stay in the European Union. Brexit would ‘limit any company’s ability to plan and budget for the future’ the firm said. In addition, leaving the European Union would probably lead to higher prices in UK shops, the John Lewis chairman has said. Sir Charlie Mayfield said a Brexit would also hit consumer confidence and spending for as long as five years.
The CBI has said a vote to Leave would ‘put British businesses out in the cold’. But Leave campaigners said the CBI does not represent British business and is ‘the voice of Brussels’.
BHS
MPs are preparing to question Sir Philip Green about the sale and collapse of retailer BHS, which he sold last year for £1. The billionaire, whose empire includes Top Shop and Dorothy Perkins, had threatened not to give evidence. MPs on the Business and Work and Pensions committees are conducting a joint inquiry into BHS’s demise.
Finally…
Millions of Britons could be at risk of household damage from escaping water due to a lack of knowledge about their stopcock. Despite it being the main water control in homes, almost seven million people in the UK have no idea what a stopcock is and 25 per cent have never tried to locate it according to new research by Direct Line Home Insurance.
While three quarters of UK adults correctly said that a stopcock is a valve regulating the flow of cold water that supplies the house, eight per cent thought it was a plug to prevent overflow in a sink or an emergency stop button for the gas supply.
While a stopcock should rarely need to be used, it is vital to know where it is located for an emergency, as shutting off the water supply could save thousands of pounds and prevent the destruction of treasured possessions if a pipe was to burst. During freezing weather spells, as many as 3,500 claims have been recorded in a single day from burst pipe damage, costing the average household £7,000.
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