How to make your savings work harder for you in a low interest rate environment?

Stephen Cameron
Financial Planning
Stephen Cameron, Lovewell Blake financial planning

As we enter a new tax year, many people will be wondering how they can make their savings work harder for them, with interest rates at historically low levels.

Stephen Cameron, Lovewell Blake financial planning

With the new tax year comes the opportunity to invest up to £20,000 into a tax-efficient Individual Savings Account (ISA). For those who have the money available to do this, there has never been a worse time to save this money within a traditional bank or building society account, or even National Savings, and receive what might be considered, a reasonable rate of interest.

The highest interest rate available in the UK for a Cash ISA that provides instant access to your savings, is just 0.45% for a whole year, and this is also variable so could change. For those who can invest for a longer period without access, the maximum Cash ISA available with a fixed rate of interest is just 1.1% p.a. for 5 years!

If inflation is higher than the rate of interest being received, there is a risk that your capital will lose it’s ‘real’ value (purchasing power) over time; therefore, deposit accounts should not be considered ‘risk free’.

For those who must retain instant access to their savings, there is little by way of choice. That said, for those who are able to consider investments for 5 years or longer, other investment opportunities are available that offer the potential for higher returns over the longer-term.

All investments carry a degree of investment risk, and sometimes this can take the form of a risk to the capital invested, or the return achieved on the capital, or both.  Importantly, investment risk does not necessarily mean there is a risk an investor could lose all of their money. Investment risks can be reduced by spreading money across a wide range of different investment companies, and different asset classes, such as government gilts, corporate bonds, commercial property, equites, and commodities.

Investment risk is a very personal thing and here at Lovewell Blake Financial Planning, we take the time to understand our client’s needs, aspirations, and investment risk tolerances, as well as their capacity to be able to take risk, and their investment time horizon. Only after we have identified all of these, do we begin to consider what type of investment portfolio might be suitable to help their savings work harder for them. 

We offer a free, initial meeting without obligation to discuss these matters in more detail, and to gather any information required from those who wish to make more from their savings. Should this proceed to a personal recommendation, you can rest assured that as an ‘Independent Financial Adviser’, we can choose the most suitable investment(s) from ‘all companies’, to ensure your savings have the potential to work harder for you. 

Hundreds of clients trust Lovewell Blake Financial Planning to advise them on, and administer their investment portfolios, and enjoy returns regularly above those on offer from deposit accounts. If you would like to arrange an initial meeting to discuss how we may be able to assist you, please contact us on 01603 619620.   

Remember, you have worked hard for your savings - why not give your savings the opportunity to work harder for you.

(Interest rate data taken from 09/04/2021)

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