You are here:

Vigilance is the watchword

Created:
18 November 2008
Updated:
19 November 2008
Written by:
Moira O'Neill

If you signed up to best buy savings rates during the past few months, check your rates as they may now be uncompetitive. Many reductions match, and in some cases outstrip, the base rate reduction by up to an additional 1.05 per cent, according to research by uSwitch.com. Continue to be vigilant in the coming months as, with further base rate cuts predicted, some of the high variable rate accounts rates won't stay around for long.

Advertising

If you can afford to tie up your money then one of the few remaining 6 per cent fixed rates, for example from Kent Reliance Building Society and Clydesdale Bank, could be a good idea. On the other hand, it won't allow you the flexibility to plunge back into the markets if you feel the urge during the next year.

Investors wishing to park in cash to make sure they use their tax shelters, continue with their retirement planning and retain the ability to return to the stock market, could consider Hargreaves Lansdown's offer of 5.5 per cent in its Vantage Sipp. Applications need to be received by 5 December 2008, with the cash maturing on 6 November 2009. Ben Lundie, head of Vantage development, says: "Many investors are finding it difficult to follow their own logic and doing nothing to plan their way out of the current crisis. They could end up kicking themselves in years to come if Warren Buffett is right and shares beat cash hands down over the next decade.

"We are suggesting a plan to bridge the short-term difficulty and make it easy to act now. Clients can lock into a great short term deal on cash to make full use of tax allowances and then ease back into the stock market."

This week, Icesave customers will start receiving their money back via the Financial Services Compensation Scheme. Many will be wondering what to do with it. Cash is not the only option for one reader and Icesave customer, who tells me he is looking at Building Society Permanent Interest Bearing Shares (Pibs), which are currently yielding 9 per cent-plus. He is tempted by Pibs from Britannia BS (13 per cent), Coventry BS (12.125 per cent), Leeds BS (13.125 per cent), Newcastle BS (10.75 per cent) and Skipton BS (12.875 per cent).

"I expect UK interest rates to continue falling in the months ahead, so locking-in a gross yield of 9 per cent-plus looks a good bet," says our reader. "It's obviously riskier than cash deposits but considerably safer than Icesave."

MORE ON CASH AND PIBS...

Compare savings rates in our savings rate tables, supplied by Moneyfacts

Learn more about Pibs and preference shares in our free Investment Guide to income exotica.

Get more high-income investing ideas from our Bond of the Week feature.

  • Back to top

Win £1,000 or a golf weekend

Enter IC's Fantasy Portfolio competition for the chance of winning £1,000 or a luxury golf weekend, courtesy of ETX Capital and Celtic Manor.

Enter here for your chance to win

Advertorial Feature

Take control of your investing with CFDs

Have you ever watched a move in the markets that you saw coming, but you weren't able to exploit?

by Dominic Picarda

Advertorial Feature

Spread your risks with spread trading

With so many big moves in the world's financial markets, there have seldom been more opportunities around for spread traders. Isn't it time you joined them?

by Dominic Picarda