Now is the time to be smarter than ever
The Bank of England’s decision to cut the base rate by 0.25% has seen many banks, including us, cut the rates on their savings products and in turn reduce the rates on their mortgage products.
So where does this leave savers? To put it bluntly, savers need to be savvier than ever and really do their homework on which savings products will give them a suitable return on their investment.
While the standard savings account is perhaps not promising the returns it once did, it is time for consumers to stretch the net wider when considering where to place their money.
Savings bonds could present the individual with the opportunity of a better rate of return interest and at lower risk than other savings products.
There are two types of bonds available – tracker and fixed rate. Tracker bonds offer the customer variable interest rates that will likely move in line with any changes to the Bank of England’s base rate. However, with the fixed rate bond you have the security of knowing you will earn a specified rate of interest for the life of the bond. In the wake of the EU referendum, certainty around interest rates is harder to predict. For savers who fancy less risk and guaranteed returns on savings, a fixed rate bond could be the answer. An added bonus is that many fixed rate bonds allow consumers to access their interest monthly as opposed to per annum – this is particularly good news for people looking to top up their monthly income or pension. Most bonds offer a term of between one and five years, with minimum deposit amounts ranging from £500 to £1,000.
The larger the amount you can afford to save over a longer period of time can really make the difference to your savings pot.
It is worth noting, though, that once your money is invested, it may be difficult to withdraw before the duration of your term is complete.
If you may need to access savings funds quickly, check whether this would be possible with your preferred savings bond product.
Contrary to popular belief, there are options available for savers. However, individuals should be considering what their savings goals are, how they can be achieved and which products will ensure those results.
The savviest of savers know that research is their secret weapon and invest accordingly.