That's a meaningless figure without some qualification/context. E.g. what pensions? invested in what assets? over what time period? And don't forget that pension returns are tax free within the pension vehicle and contributions benefit from generous tax relief.even pensions are returning around 4%
Retail deposits tend not to return above inflation over the long or even medium term.Inflation is predicted to hit 8% before long and whether that properly represents real inflation or through rose coloured glasses is another question.
That is a 1% change roughly which over the space of a year is definitely possible. Just look at this chart. Sterling went from .83 to .88I understand Exchange risk applies to savers here investing in the UK. But can someone give a proper example. Here is a simple one :
HSPB offer 3.25 on 1year fixed term. PTSB offer 1.0 on 1year. Say €/£ xrate = 0.9. Invest 100 € or 90£ I year later the corresponding sums are 101€ and 92.93£. For the UK return to be same the xrate would have to be 92.83/1.01 which is 92. This is a considerable devaluation of sterling. This simple example ignores Spread on Xrate and also Tax treatment. Would the Stg interest be treated same as € interest. What is the proper answer - worth the risk ?
It's not so much the mid-point as the range.For the UK return to be same the xrate would have to be 92.83/1.01 which is 92.
Heads (appreciation) | Tails (depreciation) | |
Invest in sterling | €113.58 | €92.93 |
Keep in € | €101 | €101 |
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