Banks and Interest Rates
It is important to speculate interest rates and manage your growth carefully. Contact our Exeter IFA team to learn more.
Banks and Interest Rates
Considering the reputation of the banks since the credit crunch in 2008, it is truly remarkable how many people are still keeping their savings in cash. Interest rates remain at an all time low and pensioners are desperate for income. Time and time again I hear that banks have more on deposit today than before 2008, despite the public’s perception of banks. If you feel you want to manage your finances better, get in touch with our Exeter IFA team
Newspaper headlines such as ‘The Great Fall of China’ and references to ‘Black Monday’ make it fairly unsurprising that savers desperate for regular income are preferring the rates offered by the banks. During my research for this article I found it slightly concerning that the banks are currently offering 3, 5 and even 7 year fixed rate savings bonds for around 3% per year. Remember you generally can’t access termed deposits until maturity. On the face of it, the rate is 50% higher than putting your money in a ordinary bank account.
Increasing interest rates
Like sweets there are many types, shapes and colours. However, we can sort them into three basic varieties.
The advantage of a Trust is that you can personalise the investments to match your attitude to risk (ATR) so they are suitable for people with a lower investment risk tolerance. You might feel that you can't do anything about IHT because you need your capital to provide for you. Trusts have a range of features that allow return of capital, either as one-off lump sum, regular lump sums or as a monthly income. It is very much a case of finding the right Trust for you. They have one additional feature that is often over looked. Taking an income as return of capital can reduce your income tax from 20, 40 and 45% to zero during your lifetime by deferring tax until you have passed away. At that stage tax may be due based on the beneficiaries’ tax status and how it is managed on exit from the trust investment.
Trusts typically start from around £50,000 and can be funded from cash or existing investments including ISAs, pension commencement lump sums and investment bonds.
Please note: Tax treatment depends on an investor’s individual circumstances, and it may be subject to change.
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