The recent announcement by the Bank of England that they will not be raising interest rates until we see a significant fall in the unemployment figures has been broadly welcomed by British business' who feel for the most part that this will give them the confidence to plan their business moves for the next couple of years in an effort to take advantage of the expected cheap credit and get the economy moving again.
This is little comfort to those who are seeing the value of their savings accounts being eroded by inflation which has been hovering around 2.5-3.0% per year for quite some time now. (You can check the current rate via a handy tool on the BBC website - http://www.bbc.co.uk/news/10612209) When the rate of inflation is higher than savings interest rate you are receiving the buying power of your money held on deposit is actually falling year on year. Shopping around for the best savings accounts will help a little but in the current environment offers that look too good to be true usually have a catch such as maximum deposit amounts etc.
The question is what can savers actually do to increase the return on their money, to my mind they have two realistic options;
- Grin and bear it accepting that the real value of your savings will continue to fall at least in the short term
- Consider placing some of your savings into investments. Not all investments have to be volatile there are asset classes that are generally quite stable and are often used by financial advisers not to give amazing returns but to hedge out inflation.
The investment options aren't something I am going to go in to here they aren't something you should consider without talking it through with a financial adviser preferably one not tied to a single product provider, if you would like to discuss the options I am easy enough to contact using the form on the right or the telephone number at the top of the page.