If you’re one of many savers across the country awaiting better returns on your Isa, news of a rate rise offered fleeting encouragement. However, the full picture remains bleak for those with cash savings.
After over a year of consecutive cuts to interest rates, some providers have begun to buck the trend, offering slightly more attractive propositions than in previous months. Savers can now get up to 2.3% interest on their cash – but there is a catch. In order to get the best rates, a five-year fixed-rate account must be opened. What’s more, those profits are expected rather than guaranteed.
For those opting to keep their cash in a current account instead, the outlook is similarly gloomy. The interest on Santander’s popular 123 account has been slashed, brought down to just 1.5%, while other banks – namely Lloyds, TSB and Halifax – have taken similar action.
Tellingly, most of the rates on offer are being outstripped by inflation, and those long-term fixed-rate accounts are only marginally above the CPI’s figure.
What can savers do to get the most out of their money?
Some current accounts are still offering up to 5% interest, but impose a limit on the amount that can be entered every month. Premium bonds are a potential option, particularly for higher-rate taxpayers, while corporate bonds and equities are an alternative for those willing to balance risk with reward.
Some speculate that keeping your savings in a cash Isa is the safer option, owing to its ongoing tax-free status, while others are advocating a ‘safety-first’ approach, keeping money safe but earning a pitifully small amount of interest. There are, however, some within the industry who favour a combination of vehicles, helping to diversify portfolios and manage risk effectively.
The right solution for one saver may not be right for others. With so many different factors in play, there can be no ‘one-size-fits-all’ solution. At Wade Financial, we work with our clients to learn their motivations, understand their desired lifestyle and build a plan that caters to their individual needs.
For advice on how best to save and invest, get in touch with us today.