“Ashes to ashes”…the death of Britons’ savings

11 Mar

Protestors against the Bank of England’s record low interest rates took to London’s Threadneedle Street at the end of last week, staging a mock funeral to draw attention to the ‘death of the UK saver’.

Members of Save Our Savers, a campaign set up to encourage government policy to focus around the social and economic importance of saving, held the protest outside the Bank of England, as talks take place to decide whether to increase the interest rate from the current 0.5 per cent low.  

Simon Rose, a Save Our Savers spokesman at the rally, said (only half jokingly): “We are gathered to mourn our dearly departed savings, under attack for the past five years from the blight known as MPC (the Monetary Policy Committee).”

Campaigners at the ‘funeral’ protested against the low interest rates and ‘mourned’ the passing of savings that were previously used to fund investment and expand the country’s wealth.  Even though the Bank of England has implied recently that interest rates may rise slightly, albeit gradually, by Spring next year, in the eyes of Britain’s savers, that’s a lifetime away.

Since interest rates fell in 2009, Britain’s savers, pensioners and all those living off a fixed income have suffered.  They have been, in effect, punished for working hard to provide a comfortable lifestyle for themselves and their families in retirement.

And with the Bank of England confirming that rates are likely to remain low until 2017 – signalling almost a decade of misery of savers – it is perhaps unsurprising that more and more people now, quite understandably, are looking to higher risk-higher return investments.

A growing number of retirees it would seem appreciate that large holdings of cash savings are no longer a lucrative option – in fact they’re making them poorer over time.  As such, we’ve seen a considerable increase in the number of deVere clients looking to diversify their portfolios, as they realise that holding cash and bonds is perhaps unlikely to fund their desired retirement.

One increasingly popular alternative are structured products, which with five autocallable notes having matured for deVere clients recently, go from strength to strength.  The maturity dates and rewarding returns are attractive to people who wish to boost their savings relatively quickly, at a much more profitable rate than cash sitting in a bank.

As it’s looking like record low interest rates are here to stay for the foreseeable future, it’s time to rethink the best ways to harvest that nest egg.

Nigel Green deVere group

Blog written 11th March


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