October 30, 2009
Have UK savings changed dramatically?
Story link: Have UK savings changed dramatically?
An interesting claim at Information Online states that UK savers have unwittingly become investors, as the only viable savings products are now fixed term bonds.
It’s an interesting observation, not least because fixed term bonds have been available for a long time for savers, but the change being reported is that because traditional savings accounts no longer give a decent return, savers are now forced to pick up on fixed term bonds, because these are the only products being offered to savers that offer any kind of decent return.
See what you think:
Savings accounts give way to investment bonds
“Traditionally, people would put their savings away into a savings account, generally a higher interest savings account, with higher rate accounts offering higher returns the less you touched your money (ie, notice accounts).
Those people with a lot of money to save would often look to save their money in multiple accounts with multiple savings providers, and those in the higher tax bracket put their money into offshore banking.
However, many savings providers are now offering higher rate savings through fixed rate bond accounts, where interest rates can be 4% or more above the Bank of England’s base rate, so long as you lock you money in to the account for two, three, or five years.
The result is a major change in the savings landscape that few have even noticed, as savers are now finding themselves forced into putting their money into bonds for a fixed term. In effect, they are now
investing in investment products, rather than saving in savings products.
The surprise is that only a few savings and investment brokers noticed this change.”
It’s an interesting observation, not least because