News Archive - March 2013
Cash isn't king any more.
6/3/2013
Returns on cash savings are getting lower and lower. Instant access savings are on a maximum of 1.5%, or 2.3% for a Cash ISA (although a minimum investment of £30,000 applies).
Even longer term fixed rate bonds are giving interest yields lower than RPI inflation which is currently 3.3% (Jan 2013).
I am in agreement with the view that interest rates will be staying ‘lower for longer’ than previously anticipated. The nightmare scenario would be to emulate Japan, which has had a central bank interest rate below 1% since 1996. The new Governor of the Bank of England is talking about the option of negative interest rates. It certainly doesn’t sounds as if they will bounce back in the foreseeable future.
I think that many savers in the UK will have to rethink their strategy.
Retirees requiring income, and others wanting real growth on savings, simply cannot rely on cash. That’s not to say that cash should not be held, but it should be seen as a liquid source of short-term funds rather than something that brings in any meaningful return.
Alternatives to cash all carry some degree of risk to capital. However, I feel that at present this risk is worth taking for anybody who is prepared to tolerate some fluctuation in the value of their savings.
For inexperienced investors it can be scary to take the plunge into this type of investment. Please ask Mulberry Financial for a meeting so that we can explain the risks and help you to make a decision.
Why go independent?
23/3/2013
As an independent financial adviser, I can look at all available options before I advise a client. A 'tied' adviser is limited to advising on the products offered by the company he works for.
This means that any advice that they give will inevitably be based upon switching any existing products over to new ones - because they are not actually allowed to advise on products provided by another company.
To give an example - I see a client who has a recently set up pension. It has low charges and a wide range of available investment funds to choose from. There is absolutely no reason why I would tell them to transfer it elsewhere. If they are not happy with investment performance I would look at the other funds available through that policy, which could be switched at no cost. The only charge would be for my advice.
In contrast, if my client had visited a tied salesman (because they are SALESMEN rather than ADVISERS), his advice would probably be to transfer the pension across into a new pension with his company. By doing this, the client may well incur transfer penalties and extra set-up costs as well as possibly higher ongoing charges.
If you want an unbiased opinion from a local adviser - you know where to come.
The material here is for general information only and is not intended to be relied upon for individual investment decisions. Appropriate independent advice should be obtained before making any such decisions. Mulberry Financial Ltd does not accept any liability for any loss suffered by any user as a result of any such decision.
The information is based on our understanding of current HMRC rules and practices (as at the news article date) which are always subject to change. Taxation and trust advice and Cash ISAs are not regulated by the Financial Conduct Authority. This site is aimed at UK residents only.
Please remember that the prices of shares and other investments can fall sharply. You may not get back the money you originally invested. Past performance is not necessarily a guide to the future.
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