UK interest rates are unlikely to be raised anytime soon, meaning that they remain historically low.

Financial Planning, Long Term Savings, Regular Savings, Retirement Planning

UK Interest Rates Are Putting Off Savers

1 Apr , 2015  

It seems with five short weeks until the general election, one thing will remain the same regardless of the resulting vote: UK interest rates are unlikely to be raised in the first year by any party.

The prediction is that the base rate will stay at its current level of 0.5pc for at least the first six months of 2016, and even then will only be raised to 0.75pc. By the end of 2017, the base rate might have reached 2pc. That is a big might! It would be four times today’s level but still at a historical low.

Of course it is widely believed that in order to get Britain back from bankruptcy, interest rates need to remain low. The problem being that whilst they remain low, inflation continues to erode the value of people’s savings. It is those who are sensible with their money, and are saving towards their futures that are being hardest hit. Expats who are saving offshore are facing a similar dilemma, with unfavourable currency conversions thrown in to boot. There is proving to be little motivation for expats and Britons alike to stop spending and start saving, certainly in the long term.

The real secret to being able to ride out the current situation is to have a clear financial plan in place. Ideally, we would endorse a full consultation with a recommended professional, a financial adviser, who is able to assist you to build a personal strategy.

However, for the purposes of general discussion, here are some general tips…

The real secret to being able to relax when the price of gold falls dramatically, or when the dollar is soaring, or whatever disaster may befall your given investments, is to diversify how and where your wealth is invested.

Naturally, you need to keep a percentage of your wealth relatively liquid and close at hand. Enough for day to day living and for any cash dependent emergencies. It is likely that you will keep cash assets in the likes of a bank account. Which means that is likely to be offering anything exciting in the way of returns, but it’s a necessity.

The rest of your wealth should be divided up and diversified across a variety of investment types, and across a range of risk appropriate paths and products.

A financial adviser will be able to help you to answer essential questions before building a portfolio. They will help you to assess your attitude to risk, your age, how long you have before you want to retire, whether you have dependants, your short, medium and long-term goals and your tax status.

All of this information is crucial to helping you and your financial adviser to decide how and where you’re best investing. With the right advice, you may find ideas about diversifying your investment choices that you had never considered before.

Consulting with an adviser should be free of charge, so it is a worthy exercise whether you decide to take their advice or not. However, the offshore and international financial landscape is complex, challenging and extremely broad. Your tax status alone can be a minefield, so it makes sense to work closely with an expert when possible.

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