Who Would Be A Saver?

I've just been sorting out this year's ISAs for House Management and myself. Being a cautious fellow I like to have cash available for emergencies so I've tended to use cash ISAs first and only gone into equities when there has been residual spare capital. However, the cash rates available are so dire that this year the full whack for both of us has gone into equity ISAs.

I have to say, I don't think life is going to become any easier in the short, or even medium, term. Did you notice the nasty little squib in George Osborne's recent budget whereby he will now allow the Bank of England to "look through" the inflation figures and target other variable such as growth? This looks to me very much like our Georgie boy saying " Hello savers. Guess what? I have a nasty state borrowing and debt problem. I can't default - that's just unthinkable. I can't really take the austerity route (what I'm doing at the moment is fiddling around the edges) - that's politically untenable. So what I've decided to do is let inflation off the leash so that the value of my state debt is quietly eroded. Unfortunately that means the value of your savings will be eroded, too. Tough". Basically what is going to happen (actually, it's already happening) is that there's going to be a transfer of wealth from savers to borrowers. And guess who is the biggest borrower of them all? Yup, the government.

So, the wrong side of 60 I may be but there is going to have to be a little bit of raciness in my life. Cash holdings may be stable but they are losing value - with equities there's just a chance of some value gain.

The footnote to all this is that the equity ISAs that we already hold have performed somewhat differently. They are both in the money but I placed the majority of House Management's dosh into income funds whereas I put some of mine into growth opportunities. House Management is doing somewhat better than me!