Recent months have seen a spell of unfortunate news for those with fixed-rate savings plans. This Is Money have reported that 44% of fixed-rate providers either cut the rates on their savings accounts, or removed them entirely last month. Additionally, the percentage differences between fixed one-year accounts and long-term accounts have grown so slight that many savings experts are stating the pointlessness of long-term savings methods in this manner. Customers might as well just take out one-year accounts with close to the same interest rates, and thus benefit from being able to access their savings sooner.
The recent drops have come into effect as mortgage rates reached new lows, and the savings market is going through a patchy of uncertainty at the moment, meaning that those who lock away their money for long periods will not be as handsomely rewarded for their patience.
So, with savings accounts on a downward trend, and not as enticing or lucrative as they used to be, what are some alternative methods that those of us with capital or savings can look into?
Here are some alternative ideas on ways you can bolster your finances.
The property investment market in the UK is thriving at the moment, and provides a great long term alternative to savings for those with substantial amounts of capital. Not only is the asset class one of the most secure that you can go with, being a tangible, physical commodity, but the opportunity for making a passive income is there on buy-to-let properties, where you can make regular rental yields from tenants each month.
RW Invest is one of the many property investment companies focusing on thriving northern markets at the moment in consistently demanding student cities such as Liverpool and Manchester. These areas offer high average rental returns and growth potential, and the pivot towards a more luxury strain of accommodation from young people means that new builds are common, and even sometimes offered at below market value where still in construction phases (known as off-plan investment).
Online savings accounts
Those who are confident with the savings model and still want to put their money into one year, or long term savings accounts should do some detailed research on the best deal that they can get, and even look towards some online savings accounts. Online banks typically offer higher yields than traditional banks due to their low overheads, and can be a simpler and more effective way to make up for the dipping rates.
Remember: When deciding on an institution to go with when opening a savings account, it’s important that you go with a company that’s reputable and trustworthy. Do your homework on how legit a project is before jumping into it headfirst.
If looking for an interim solution to store your capital, while thinking about what financial steps to take next, an easy-access savings account could be a good solution. Many banks are actually starting to offer these with better rates as opposed to their weakening long term savings accounts. With this strategy you will obviously still have ‘easy-access’ to your funds, and you can jump out and into a different strategy should the rates start to dip to a percentage you’re not happy with.