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Tips for Ultra-Cautious Savers
The current economic climate is particularly unforgiving for savers with several institutional lenders unlikely to share the recent base rate hike with their customers.
This will come as a blow to UK households, particularly after the Bank of England (BoE) recently increased the base interest rate to 0.75%. Nationwide has already said that its savers will see a meagre 0.1% increase in interest rates, despite the fact that tracker mortgage customers will see the full 0.25% hike applied to their monthly repayments.
This is particularly bad news for cautious savers who must now reconsider their strategy if they’re to make the most of their capital. To aid this process, we’ve listed a few investment tips for risk-averse savers below:
Ensure your money is held with a regulated provider
Many investment companies post adverts offering stellar investment returns with no risk – usually when you transfer your SIPP or another pension to them. These adverts often sound too good to be true, and they usually are. Such companies are always unregulated, and usually unlawful too.
On the other hand, self-invested personal pension (SIPP) providers such as Bestinvest are regulated stringently by the Financial Conduct Authority (FCA).
Regulated companies must follow a strict code of ethics, and they are required to ensure that client assets are kept separate from their own money.
Not only this, but the FCA (Financial Conduct Authority) has compelled companies to rigorously vet investments and pay due diligence to the interests of customers at all times.
SIPP holders can also offset their risk by investing in a diverse array of domestic and international assets, which in turn offers access to sustained and healthy returns.
Consider the Benefit of Managed Accounts
There’s no single investment method that is without risk, which is why the concept of diversification is central to every successful portfolio.
However, building a diverse investment portfolio is exceptionally challenging, as individual assets must be strategically selected in line with your existing wealth and future objectives.
To achieve this, inexperienced or cautious investors should look to invest in managed accounts. These are typically overseen by seasoned investment advisers and managers, who can tailor a portfolio to suit your needs and help you to get the most from your money.
These groups will also create a portfolio that reflects the wider economic climate and trends that will shape it in the future.
Look at Fixed Rate Savings Accounts
We’ve already touched on the fact that lenders are offering minimal interest rates to savers, so cautious investors will need to compare the market carefully before choosing an account.
In general terms, fixed-rate savings accounts offer the highest guaranteed returns to customers as you must agree to leave your money untouched for a long and predetermined period of time.
In fact, the longer you agree to leave your cash untouched, the more interest you’ll be able to accrue.
You’ll need to pay attention to your financial circumstances before committing your money to this type of account since falling interest rates can also undermine your long-term goals.
However, this should not be an issue in the current climate with the BoE promising further incremental base rate hikes in the future.