Protect your savings from inflation

 Money Saving  No Responses »
Jun 082011
 

While low interest rates are good for people with mortgages it isn’t necessarily good news for savers with their savings being hit with rising inflation, which in real terms means that you are getting a negative return on these savings.

The average easy access savings account currently pays 0.97% gross on a £1,000 balance – although some pay as little as 0.01% and the highest paying account pays just above 3%.

So how do you beat low interst rates and rising inflation to inflation proof your savings.

So, is there anything you can do to inflation-proof your savings?

You can invest in Open Ended Investment Companies (OEICS) or unit trusts that  have funds investing in inflation linked and/or other fixed rate investments that are targeted to have a return that matches or betters inflation.

There is no guarantee that they will meet their targeted performance and there is also capital risk in that the price of the units can fluctuate.

Most of these funds invest in gilts rather than corporate bonds.

M&G Investments has recently launched its UK Inflation Linked Corporate Bond Fund that invests in index-linked corporate bonds, Floating Rate Notes, index liked gilts and other fixed income instruments. It aims to achieve a return that beats CPI over the medium to long term.

Aegon’s Inflation Linked Fund also specifically aims to outperform inflation, although it can have up to 60% exposure in equities.

Bear in mind that you may have to pay an initial charge to buy an OEIC – or a bid/offer spread in the case of a unit trust – and that there will also be an annual management charge.

You can hold these funds in a stocks and shares Isa which would remove much of any potential tax liability. If held outside an Isa you may be subject to income tax on interest received and capital gains tax on any gain when you sell the units.

If you want to invest in an OEIC or unit trust you can do so either directly through the provider or through an independent financial adviser.

 Posted by admin at 12:52 pm  Tagged with: , ,

Bank of England advises “spend not Save”

 Savings Advice  No Responses »
Oct 032010
 
spend not save

photo Credit - http://www.flickr.com/photos/x-ray_delta_one/

Is this the worst piece of financial advice ever? Charles Bean, no less a figure than the Deputy Governor of the Bank of England, has told British consumers that they should be spending rather than saving to help the economy recover.
To add insult to injury, he added that savers shouldn’t expect to be able to live off their interest in the current climate, but should be looking to “eat into their capital” to help make ends meet, and, where necessary, use the equity they have in their homes.
Such advice may sound like madness at a time when thousands of workers fear job cuts, there are record numbers of insolvencies, concerns about a housing market slump and a double-dip recession, and the pensions gap is wider than ever.
Prudent savers have been hit hard by the financial crisis and subsequent recession.

The measures taken to stabilise the banks and kick-start the economy have resulted in rock-bottom interest rates and rising inflation – both anathema for those trying to build a decent nest egg for their retirement.
While the Bank of England’s economic policies have cushioned those who mortgaged themselves to the hilt, splurged on credit cards and spent all they earned, helping to create the debt bubble in the first place, many are angry that no help has been given to savers, who outnumber borrowers by nine to one.

Now they are being urged to sacrifice some of their hard-earned savings in order to give a temporary boost to the country’s output.

Mike Warburton, an accountant with Grant Thornton, is one of many to have branded Mr Bean’s comments “irresponsible”, saying they run contrary to sound financial advice.

 Posted by admin at 5:08 pm  Tagged with: , , ,

Start Saving for Christmas

 Family Money Saving, Money Saving  No Responses »
Sep 222010
 

christmas star

Prepare to groan: as of today there are just 94 days until Christmas. For those who are cash strapped or simply humbuggish, we suggest the best ways to prepare for this year’s festive season …

1. Start setting money aside, and earn some interest on your savings in the meantime. The market leading easy access account is the AA Internet Extra account, paying 2.8%, according toMoneysupermarket.com.

2. Earn money while you spend by applying for a cashback credit card: it may even arrive in time for this year’s Christmas spending rush. TheAMEX Platinum Cashback card pays 5% cashback on purchases in the first three months, returning up to a maximum of £100. The card then pays cashback of up to 1.25%. There is also 0% interest on purchases in the first six months. However, you will only benefit from if you can afford to pay the bill off after the first six months.

3. If you can’t afford to pay off your credit card in full, use a card which charges zero interest to make your Christmas purchases. Tesco’s Clubcard credit card is offering the longest 0% period at 13 months for purchases and nine months for balance transfers (subject to a 2.9% transfer fee), according to Moneynet.co.uk. You’ll also earn one Clubcard point for every £4 spent.

4. Planning to go away for Christmas? People who apply for the Flybe Spend & Fly Mastercard before 31 October and use it once or more before 31 December will get two bonus return flight vouchers. The voucher has to be used within 12 months and can be used anywhere on the Flybe network. All the cardholder has to do is pay the taxes and airport charges.

5. Use discount vouchers wherever possible. It isn’t cheap, it’s sensible. Given the way pizzas have gone up in price over the past few years I suspect they have been included in the price anyway, and that certain retailers expect them to be used. Take a look at the Guardian’s selection of the best discount vouchers available.

6. If a mobile phone, including this year’s must-have iPhone 4, is on your shopping list, visit the cashback and voucher site Quidco to see what deals are on offer. This week, for example, it’s got a £70 cashback offer on all iPhone 4 Vodafone contracts bought through Phones4U until 22 September.

7. Recycle you old phone if a new one appears in your stocking: it could help pay off some of the bills you’ve clocked up. Several internet-based firms pay for old phones – Mazuma Mobile is just one of the sites where you can get a valuation by simply typing in your current model. As with anything, it’s always best to scour around for the highest value, and if you don’t think you’re getting enough eBay is always a sensible back-up.

8. Trugging around from shop to shop buying groceries is exhausting and time consuming, but the one time of year when it is really worth doing is Christmas. Once again, check out prices online before you hit the shops: try mysupermarket.co.uk for a comparison.

9. A big part of Christmas in our household is the local Pantomine, but tickets can be pricey. Instead, why not try and get your hands on free audience tickets for the plethora of festive TV and radio shows on at the BBC. Visit the website regularly for updates on ticket availability for the latest shows.

10. Do an Allegra McEvedy and plan scrupulously what you are going to eat in advance of Christmas. Check your cupboards while drawing up your shopping list: you are bound to have a can of leftover chesnuts or marzipan lurking in there somewhere. Try to make some space in your freezer before and during the Christmas: this will enable you to freeze leftovers instead of wasting them, and allow you to make the most of any Christmas offers on seasonal food.

From an article on the Guardian.  Photo Credit – http://www.flickr.com/photos/vickyb

 Posted by admin at 6:36 pm  Tagged with: , , , ,

Money Saving Tips for using your Freezer

 Money Saving Recipes  No Responses »
Aug 312010
 

frozen berriesDid you watch the “Great British Waste Menu?” programme on the BBC last week?  It followed four top chefs – Angela Hartnett, Richard Corrigan, Matt Tebbutt and Simon Rimmer – as they journey deep into the heart of Britain’s food waste problem, exploring how and why the nation throws away and reject huge quantities of perfectly edible food.

We think that the freezer should be every food lover’s best friend!   It’s a great tool for preserving food, sealing in freshness and keeping tasty meals to hand, which can save us time and money and help to reduce food waste.

freezerFollow our hints and tips to make the most of your freezer.

  • You can freeze almost any food (including hard cheese, eggs, bread, home made meals, cakes) although some foods do not freeze as well as others. The structure of some foods with a high water content like lettuce and tomatoes will change when frozen, however these can still be frozen and used for soups and sauces, rather than throwing them away.
  • Food doesn’t have to be frozen on the day of purchase. It can be frozen at any point up to the end of its “use by” date.
  • Food should be cooled before transferring into the freezer otherwise the heat from the food will warm the freezer up causing it to use more energy. Let it cool on the side, wrap up well and label, before transferring it into the freezer.
  • There is no need to thaw vegetables before cooking, simply steam or boil from frozen for 5-10 minutes, depending on the variety.
  • You can freeze home grown produce, simply top and tail and blanche for 2-3 minutes before plunging into cold water and drain. Freeze flat to avoid “clumping” – once frozen solid they can be bagged in portions to save space. Soft fruit can be frozen whole, or pureed first and frozen for use in drinks or sorbet.
  • It’s best to defrost food gradually in the fridge so it keeps cool until you are ready to cook it. Try to put frozen food in the fridge the night before you intend to eat it and it should be defrosted in time for tea. Use it within two days. It is also safe to defrost at room temperature provided you intend to eat it as soon as it’s thawed.
  • Frozen raw meat or fish can be defrosted, cooked thoroughly then frozen again. Take care to defrost thoroughly and re-heat until piping hot. Remember, food should never be reheated more than once.
  • If uncooked food has been defrosted by accident don’t try to pop it back in the freezer – cook it and either eat it, or re-freeze it, as above.
  • You can keep food safely in the freezer for years, as long as it has stayed frozen the whole time. However, it will gradually lose its quality and taste, so avoid “stockpiling” by planning to eat frozen foods more often so you don’t forget what’s in there and “rotate” older foods to the front so they can be used up first.
  • For a stress free dinner at a later date, try cooking batches of dishes such as chilli, curry or stew, and freeze them in handy portion sizes. Make sure you reheat your food until it’s piping hot.

photo credit – http://www.flickr.com/photos/sporkist/

 Posted by admin at 1:12 pm  Tagged with: , , ,

Child Trust Funds – Viable Savings Alternatives

 Family Money Saving, Savings Advice  No Responses »
Jul 312010
 

Now that the new government has announced the demise of the state supported Child Trust Fund (CTF), what are the alternatives for parents who are still keen to put cash away for their little ones?

Previously awarding each and every child in the UK two vouchers of £250, CTF payments will be reduced as from August and be completely axed at the end of the year – but if you’re locking away money for 15-20 years there are loads of viable options still available on the market.

Offshore Personal Savings

Easy access and fixed term offshore savings accounts generally offer low or tax free conditions, easy access and higher rates of interest. The later generally offering a better rate of return for the saver – perfect for long term investments.

Children’s Products

There are a few high street lenders in the market who offer products aimed specifically at investments for children. These are great because they tend to deliver on key areas such as control and beneficiary, but if the investment is intended to be long term, any saver would do well to compare returns, terms and conditions with other non-child packaged products on the market.

Trusts

These fall under bare, unit and investment trusts, all of which are opened in a trustee’s name on behalf of the child. Unit trusts are a type of ‘pooled investment’ – a fund manager buys shares in a range of different companies and pools these in a fund; you then buy ‘units’ in the fund. Investment trusts invest in the shares of different companies, allowing investors to spread their risk. The main difference from unit trusts is that investment trusts are themselves companies in which you buy shares. Unlike unit and investment, the trustee’s of bare trusts are simply nominees and must act according to the beneficiary’s instructions.

ISA’s

A long term investment ISA is a great option if you’re planning to lock money away for a long period, and despite recent watchdog revelations in the media about low paying ISA’s, there are still a few choice products on the market that offer up to 5% return – plus they’re tax free. If you want to play with your money, cash ISA’s offer excellent tax-free annual returns.

National Savings & Investments

Backed by the HM Treasury, National Savings and Investments (NS&I) are one of the largest savings and investment providers in the UK and offer 100% security. Alongside Premium Bonds, NS&I offer a variety of products, including index-linked and fixed-interest savings certificates, children’s bonus bonds, direct ISA and investment accounts.

 Posted by admin at 2:06 pm  Tagged with: ,
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