Good morning! Always nice to hear from a Dozens Fan
So, your maths is correct, but rather misses the bigger picture.
You are drawing your conclusion from a single issuance in a single month. Firstly, this was the first, small and very highly oversubscribed, issuance. The £200 figure may turn out to be true across future issuances, we will see, but since there are currently £1m of bonds available, the median in October may well be higher.
Secondly, this is the first of a series of issuances. It is not about a one-off investment of £200. If you take part each month, even assuming the number stays consistent, that’s £2,400 earning 5% - i.e. £120.
The reality is that a very substantial number of UK consumers, particularly younger ones, have NO SAVINGS AT ALL (in 2018 50%+ of all 20-25yo have £0-£2000 total savings).
Even if individuals manage to scrape together anything at all, they are not rewarded for saving it instead of spending it. Yes, inflation will eat into the 5%, but that is also true in any other circumstances. If you keep it as cash, in a current account or even most Cash ISAs, you will end up with less than you started with. It is this crazy scenario that encourages more and more spending today, and reduces your ability to cope in future.
If you were able to put away just £200 a month (which is quite a lot for most of us), and were sure it was going to be worth more than it is now in 12 months, AND you could be sure to get access to it at any time, is that not a good thing?
Now, if you already have a lump sum, you have other options available to you in the market. Dozens is also working on providing you with other options for helping you to invest this for your future, so you can then choose the most appropriate option for you and your risk levels.
I wonder what alternatives you might suggest that would “show respect to all their customers”? For the avoidance of any doubt, we are not a bank and we cannot pay interest on deposits. If you have any other ideas, we would definitely be happy to hear them.
Finally, there’s no need to get involved with the Dozens Fixed-Interest Bonds if you consider this to be not worth your time, of course. You can still enjoy the features such as the built-in budgeting tool and the fee-free travel transactions, and we will be announcing more details of the Invest tool that is currently open for browsing only.
Thanks for raising these interesting issues.