New figures from the Bank of England this week revealed that average interest rates on long-term savings accounts were now at 2.4%, an all-time low. In response, families have withdrawn a staggering £23bn from their savings in the last 12 months – £900 for every household in the UK. But perhaps the greatest surprise here is that it’s taken this long for UK savers to react.
It’s been an incredibly tough few years for savers, so it’s no surprise to see they’re withdrawing en masse from their high street savings accounts in the face of very meagre returns.
Interest rates have held at 0.5% for 44 months, inflation has been well above the Bank of England’s 2% target rate all year and many UK workers have seen their salaries frozen in recent times. Many are effectively losing money every day they keep their cash in a standard savings account.
It seems the trend may be set to continue, as savers seek out better returns and get smarter with their money.
The Bank’s announcement that average savings rates are now at 2.4% adds further fuel to the fire and will force savers to explore alternative investment options.
Compare that to the kind of performance you can get from an investment portfolio. For example, our medium-risk portfolio delivered 12.3% returns in the 12 months to October 2013. That’s a profit of over £3,000 on a lump sum of £25,000 – in just one year, after fees!
No wonder we’re witnessing an influx of customers who are simply frustrated at seeing their savings lose value every month. There are more intelligent investment services out there and you don’t need to be super-rich to achieve them – you can start a Nutmeg portfolio with as little as £1,000 (plus £50 contributions per month up to £5,000).
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If you are looking to invest but are not sure where to start, Nutmeg can help. We build an investment portfolio for you based on financial information you provide and your personal attitude to risk. And our online tools are data driven, giving you a clear idea of risk and return. We’re low cost and transparent so you can always see where your money has been allocated and how it’s performing.
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