Interest rates remain at record low


Sally Harrison, Chartered


Financial Planner


Keeping enough money easily accessible on deposit is a high priority for your financial security and this should be one of the foundations of your personal financial plan.


However after the Bank of England has kept interest rates at 0.5% for 31 months in a row, the rate of return you will get on your cash savings is low.


If you do not have enough accessible cash then you may be forced to sell assets such as property, shares and bonds, at inopportune or even bad times. Doing so could cost you a lot more than had you kept enough back. The bottom line is to have adequate cash reserves to handle most, if not all, unforeseen circumstances that may arise.


Banks or building societies remain the safest place to keep your cash in the short term. Despite the downgrading of financial strength in many global banks your deposits will be guaranteed by the Financial Services Compensation Scheme (FSCS) up to £85,000 per institution, per individual and you should


Current Interest Rates


Internet Account: 3.12% (Includes 1.58% bonus for 12 months) – minimum deposit £1,000 (Nationwide)


No Notice Account: 3.00% (Telephone Account -Includes 2.46% bonus for 12 months) – minimum deposit £1 (ING Direct)


Regular Saver Account: 4.00% – minimum monthly deposit £1 (Norwich & Peterborough) Over 50s Account: 2.75% (Telephone Account) – minimum deposit £1 (SAGA) Childrens Account: 2.00% – minimum deposit £1 (Chelsea)


Mini Cash ISA: 3.00% (Internet /Telephone Account) – Instant Access, minimum deposit £1 (ING Direct)


Source: Moneyfacts November 2011 12


not be worried if your savings do not exceed these levels.


Although you should be holding adequate reserves of cash, over longer periods of time historically cash deposits have not kept pace with inflation. At the present time inflation is significantly higher than the rate of interest you earn on deposit, so this money is effectively losing value each year.


At Old Mill we believe risk and return are related and in order to have the prospect of providing a return in excess of inflation over the longer term it is necessary to commit monies to assets such as Property and Equity. You should consider how much you want to keep easily accessible, and how much you are prepared to invest.


It is important to ensure your money is invested in a robust and consistent manner and our Portfolio Management Service takes into account your personal views towards risk when we tailor a portfolio for you.


We check the rates on all your cash deposit accounts where possible at your annual review.


However it is always worth keeping an eye on your own accounts as well. You may be surprised how rates on ‘old accounts’ can be reduced to make way for ‘new style’ accounts.


Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16