Martin Lewis shares his prediction for interest rates
Interest rates have unfortunately tumbled recently, with the situation impacted by the Bank of England decision in March 2020. The central bank decided to slash its base rate to 0.1 percent, creating a knock-on effect for other more familiar providers. With a lack of ability to make money grow, and speculation about negative interest rates, some have questioned whether it is worthwhile putting money away at all.
But there could still remain options on the table for Britons looking to make their money work for them.
Express.co.uk spoke to James Norton, Senior Investment Planner at Vanguard, a popular investment platform about the matter.
Mr Norton provided further insight into the issue of interest rates, and the difficult situation faced by many savers who are attempting to navigate the current market.
He provided guidance into some of the options currently available, and made suggestions as to how funds could be grown.
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Mr Norton said: “Interest rates are really abysmal as they currently stand, and it would be my recommendation that people should be looking to move out of cash.
“However, while this is true given the current situation, there is also one provision when it comes to taking this kind of action.
“Moving out of cash will only be appropriate if you ensure you have enough cash to hand for emergencies.”
It is generally the case Britons will need to build up a cash reserve of somewhere between three to six months.
Such a fund is likely to provide a valuable financial cushion for Britons should they fall on hard times.
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And amid the ongoing pandemic, having additional protection in the form of savings appears to be an even more sensible option.
However, this should not be the end of the road for Britons who are stuck between a rock and a hard place when it comes to savings.
Instead, Mr Norton suggested, taking further action to grow funds in a different way could mean Britons remain on track with growing their money.
He added: “Once you’ve established a strong fund in cash, perhaps in an easy access account, you should be considering other options available to you.
“Perhaps you should be looking at investing, instead of cash, as the potential for your returns with this method could be higher.
“You may choose different funds, or look into a stocks and shares ISA, but whatever you choose, you have to make sure you bear goals, balance, cost and discipline in mind.
“Set out your goals, ensure your investments are balanced, have an idea of your costs, and then stick to your plan – be disciplined.”
But once again, Britons may need to go further to ensure investing is doing the job it is intended to do.
A failure to understand one’s investments could mean people end up doing more harm than good.
Mr Norton concluded: “In addition, you have to be thinking about the long-term when it comes to managing your money.
“This is primarily because of the level of risk which is involved when you are looking at investing – perhaps even for the first time.
“If you will need the money within a year, or 18 months, you should not be investing in the stock market.
“This kind of arrangement needs to be long term in order for you to ride out the ups and downs of the market.”
The Money Advice Service generally recommends Britons seek regulated financial advice before entering into investments.
Its website states: “The right savings or investments for you will depend on how happy you are in taking risks and on your current finances and future goals.
“Avoid high-risk products unless you fully understand their specific risks and are happy to take them on.
“Only consider higher risk products once you’ve built up money in low and medium-risk investments.”
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