Be a step ahead with your savings
NOVEMBER 23RD, 2009 By ADAM
You cannot pick up a weekend paper at the moment without a headline about the current dilemma for savers. The Daily Telegraph recently stated that 9 out of 10 savers fail to make any money on their investments and many even lose money after inflation. The primary reason for this shocking statistic is that the vast majority of savers are not making their cash work hard enough.
Banks are constantly attracting new customers with headline rates and special deals. Once your term is up, however, it’s time to get a new special deal or get left behind in some bank default account often earning next to zero interest. The difference between obtaining a rate of 4% in comparison to a rate of 0.2% can often run into the hundreds, if not thousands, making it vital to search for the best deals on offer. Assuming that the bank will treat you fairly and place you on their best deal automatically will lose you money. After all, banks make a margin on your savings so the less interest they can get away with paying you, the more money they make!!
When you are deciding on a new account, it is also important to read the small print. Here are a couple of things to look out for which crop up all the time. Is the headline rate offered on the full amount or is that rate tiered? With a headline rate that sticks out from the competition, there is usually a catch, ie. must be balances over a certain amount or tiered rates on certain amounts. These types of accounts are becoming more common within the marketplace so watch out – simple can sometimes be best.
Are you being offered a savings account or an investment? This is very important. We often come across clients that have been led to believe that they have a fixed term deposit account with a bank, when in fact they have invested in a structured product (which is a completely different beast altogether) and of course the banks will earn a commission from selling you one of these.
You have worked hard to save this money, therefore, don’t let the banks take this hard work away. Take proactive responsibility for your savings and make sure that you get the rewards you deserve.
Written by Adam Carolan
Posted in: Investment planning 5 Comments
Other Links to this Post
RSS feed for comments on this post. TrackBack URI
By Mike, November 24, 2009 @ 11:33 am
Really useful advice, I am currently looking at a product that I thought was a fixed term deposit account – on closer inspection this could be a structured product, which I don’t want.
By Andrew Bones, November 24, 2009 @ 1:03 pm
Some strong tips in what can be a confusing area in dealing with the banks.
By Rob, November 24, 2009 @ 2:53 pm
Some good recommendations. Undoubtedly changed the way in which I view savings accounts, for the better.
By Adam, November 24, 2009 @ 3:11 pm
Thanks Mike. It is always important to make sure you understand what you are investing in before making any financial decision. On another note, structured products do have their place within some investment portfolios and are very topical within the investment arena at present. Due to demand, we are planning to do an educational blog about how structured products work and the pitfalls and advantages, so keep in touch.
By Peter Simpson, December 4, 2009 @ 2:37 pm
Many Thanks. As always really useful.
Just a comment: I read all the blogs as I am sure most of your customers do. The lack of comment on some blogs does not reflect lack of interest! Keep them coming,and thanks for doing them!