Simon Read: Don’t yearn for the golden years of finance – they never really existed
The People’s Champion
One thing I’ve discovered as I get older is that there’s never been a golden age.
Sure, wearing rose-tinted glasses can help people imagine that things were better back in the day than they are now, but it’s seldom the case. For every way life has seemed to get worse, there are generally lots of ways that it has improved.
Take banking. It’s easy to hark back to the golden days when your bank manager was your friend.
There were, of course, cosy armies of Captain Mainwarings who were happy to take the time to talk to you and help you sort out your finances. And you’d be happy to share a convivial glass of sherry with them at Yuletide.
Now, as we all know, bankers are only interested in finding ways to flog us expensive and useless insurance to line their fat pockets.
But that’s just not true. Bank staff are generally as helpful as they’ve ever been. It’s their bosses who force them to flog expensive loans and insurance that are the problem. In my experience frontline bank workers are happy to help you if they can.
What has changed in banking is the introduction of technology, which has hugely improved the way we control our finances.
I could start by mentioning cash machines. Before they were introduced we had to queue up inside branches to withdraw money.
Even when I first got a cash card, it was for a set amount – a fiver or tenner – and was swallowed by the machine and sent on to you a few days later.
Now? We can get access to as much of the cash as we have in our accounts whenever and wherever we need it – from tens of thousands of locations all over the world.
But then, we don’t really need to carry cash, do we? Because we can conveniently pay for everything on plastic cards. Or use our phones to pay online, or even transfer money to friends in the pub or a restaurant.
Technology has also been a massive boon to investors. No longer do we have to call a broker and hope he or she is sober enough to make the trade we’ve requested.
Now we can make the deal ourselves online – and at a fraction of the cost. That speed and low-cost convenience ensures we can be fleet enough to profit from fast-breaking news, or flexible enough to switch in and out of shares or funds.
What about borrowers? They’ve never had it so good. Interest rates have been at a record low for some years now meaning mortgages have hardly ever been more affordable.
And even if the deal we’re on gets a little uncompetitive, we can simply go online to find a better one and then switch fairly easily and painlessly.
Loans, too, are at record levels, which means borrowing for a car or holiday, for instance, has never been much cheaper.
When it comes to savers the position changes a little. This year has offered no solace whatsoever for those with nest eggs.
Frankly, millions of us are getting such paltry returns on our deposit accounts that it’s hardly worth stashing any cash in them.
In fact, as inflation ravages the real returns we get, just by letting our nest eggs moulder in a savings account we’re actually losing money.
But have times every really been much better for savers? The days when you could look forward to getting 10 per cent or more on your savings were at a time when it cost up to 15 per cent to borrow for a mortgage.
The differential is not much different now. If you’re free of all borrowing and therefore think that you’re penalised by the paltry rates you’re being paid on your savings, then consider this: being debt-free is the best position of all.
If you don’t owe money to anyone then you have the freedom to do with your money what you wish. That’s a stage we’re all striving to reach.
And there’s no doubt that interest rates will start rising soon. Maybe not in the next few months, but certainly at some stage this year.
So don’t talk to me about the golden age of the 60s, 70s, 80s or whenever. In many ways we’re living in a golden age of finance right now and, looking ahead, things are set to improve.
If you are struggling with debt it may be a little harder to be positive, but taking control of your finances and budgeting carefully will help you achieve a happy financial future.
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