The continued political and financial uncertainty has made us all think about the decisions we make and the risks we take.
With inflation rising relentlessly, with Consumer Price Index (CPI) now at 2.90% in May 2017, savers are having to use all the tools in their armoury to mitigate the effect of increasing day to day costs, while the interest they are earning on their savings is falling.
Recent news reports around poor interest rates and high inflation could trigger savers into thinking they need to look at alternatives to cash, as a way of protecting against inflation. But there really is no alternative without adding risk and while this may be the right path for some, it will not be for everyone, highlighting how important it is to work with the right advisers, who can explore all options available to you. Download our new Insider’s Guide to Wealth Management for further guidance.
Whilst the Monetary Policy Committee (MPC) yesterday had the closest vote for a Bank of England base rate rise since 2007, the continued uncertainty surrounding our new Government, never mind what’s going to happen with Brexit means that it is still unlikely that we will see a base rate rise anytime soon.
And whilst Bank of England figures state that the average easy access account is paying just 0.15%, we all know that your money doesn’t have to languish in such an appalling account.
The battle is continuing between the challenger banks, even in the easy access market with the introduction of Kent Reliance’s Easy Access Issue 19 paying a table topping 1.15% yesterday. See our Rates Rundown for more information.
On a balance of £50,000 the difference between leaving your cash earning 0.15% and putting it into this best paying easy access account can be meaningful. So rather than £75 gross interest per year, you could earn £575 gross per year.
And if you are happy to tie it up, rates are even higher.
Another increase this week is from Atom Bank, now paying 1.80% for 12 months, so on £50,000 that means interest of £900 gross per year. For those who’d rather not use an app to open an account, they could still earn 1.70% (£850 gross per year) also with Kent Reliance.
In summary, don’t panic but do take the time to review your goals and your current advisers and then move forward knowing that with the right bespoke advice, you can continue to work towards achieving your long-term goals.
Anna Bowes, Co-Founder and Director of Savings Champion