In an ordinary world, savers should have been rubbing their hands with glee when the Bank of England implemented another rise in the base rate.
Although a 0.25 per cent increase to 0.75 per cent will, in reality, have little impact on your hard earned cash in the bank, it was, at least, a small reward for those canny folk who have something put aside for the future.
But with many of the high street banks quick to raise mortgage rates but slow to pass on the benefits to savers, the interest rate rise should be the push many people need to be more proactive with their money.
Straightforward savings accounts haven’t been a particularly attractive prospect for some time, giving very little return on your money. But there are other ways to make your savings work smarter, not harder.
Investing in stocks and shares, bonds and gilts and equities are all options open to the private saver but some people are naturally cautious, as they don’t want to lose their financial cushion.
Can you be patient?
But – with the time honoured warning that the value of investments may fall as well as rise – any long-term investments (i.e. more than five years) would likely exceed the paltry savings rates on offer at the moment.
For example, if you had invested in the stock market five years ago and reinvested your dividends you’d be enjoying growth of 16.5 per cent (a whopping 41.2 per cent with dividends).
If you’re the patient type and are happy to tie up your cash for even longer, you’d get returns of 39.7 per cent over 10 years (104.4 per cent with dividends).
With the Bank of England only predicting gradual interest rate rises in the future, now is definitely the time to review your savings plans.
For advice on savings, investments or any other financial planning for your future, why not give us a call on 01952 820155 or pop in to our Newport High Street office?