Now is the time to be smarter than ever

Kentish Gazette Canterbury & District - East Kent Property - - MONEYLIVING -

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.

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