A recent report from one of the UK’s investment providers makes gloomy ready, especially if you have held large amounts of cash deposits for the last few years. This year marks seven years of the Bank of England Interest rates at 0.5%. The report confirms that over this period the average return on cash Isa’s was just 1% p.a.
The analysis of average annual cash ISA rates shows an average cash ISA saver has received just 6.8% over the seven-year period since interest rates were cut by the Bank of England.
Even though inflation is currently low the report reveals that in four of the last seven years Cash Isa savers have lost money in real terms as the return they have received has been less than the rate of inflation.
The report shows someone who has used their full allowance into the average cash Isa investment would have saved £24,911 since March 2009 and seen it grow to £26,272. The gain of £1,729, a 6.8% return before inflation.
Annual average cash ISA rates have at the highest point been up to 2.8% and have been as low as 1.4%. Inflation on the other hand has ranged between 4.48% and as low as 0.04%. In 2010, through to 2013 inflation was higher than average cash ISA rates.
Although inflation is expected to increase over the next few years, that does not mean to say the returns on cash will improve.
Investors need to be aware if we have a few more years of low inflation and low returns on cash then they could be faced with a whole decade whereby the total return on cash is less than inflation over the same period. A question I would always ask savers is whether they want the return on their investments and pensions to at least keep up with the rate of inflation. If the answer is yes, then it might be worth discussing the issue with your financial advisor.
Alternatively you can look at the moneyfacts site to find the best rates
Time and time again forecaster try to predict what will happen in the future to Stock Markets. In reality, nobody knows what Markets will do next.
The Wall Street Journal in the US recently
published an article about the performance of Global Stocks and Shares. The
article was called, “ Global
Stocks Post Strongest First Half in Years, Worrying Investors
for stocks and shares investors is whether the strong first six months of 2017 heralds
a choppier second half or the start of a multiyear upswing. The data on global
rallies offers a mixed record.”
In plain English, this means:
“It’s impossible to predict whether markets will go up or down for the latter half of the year. Markets could go up or down or even trade sideways.”
The newspaper article also reported that: “Most of the major stock Market Indexes, 26 in total have risen in value so far in 2017. The last time this happened was in 2009.
Over the month weeks and months, we are looking to improve the personal finance portal (PFP) for our clients. The first stage is to introduce a live chat, audio and video service whilst clients are logged into PFP. This is the first level of improvements we will be making over the coming months. The live chat service is safe and secure.