When interest rates pay out 0.01%


We’ve all seen bank and building society advertisements promising savers attractive headline rates of interest, only to find these returns can later tumble, perhaps as low as 0.01% per annum in some cases.

Such figures are derisory by anyone’s standards and mean savings are constantly eaten away as inflation runs above 5%. This is understandably a big worry for many, particularly those facing retirement on a fixed income.

It was very sobering to see in a report from Saga how one in five over-50s fear they will have to sell their family home to meet the cost of rising energy, petrol and food bills. Another survey found a 30 per cent rise in the number of homeowners aged 66 – 70 selling their houses and becoming tenants.

What can be done about rock-bottom interest rates at a time of rising inflation?

Consulting an independent financial adviser is a sensible step. Qualified, experienced advisers specialising in helping clients to financial wellbeing in later life are able to search the whole market place and can tailor solutions to individual circumstances.

The answer to providing a reasonable income while interest rates are derisory can often come through a blend of different products, funds and accounts.

If a client was able to expose their capital to some risk, they could consider stock market investments that might offer the potential for better returns:

  • Investment in funds that hold cash-rich companies offering decent yields may be one option.
  • Fixed-interest investments could be another option.
  • Holding a proportion in property funds could be a good strategy.

Getting the mix attuned to a client’s tolerances while balancing the need for the potential of a reasonable return requires specialist advice.

We can help you find this balance.