Post Brexit and the US election, there have been many economic fluctuations this year; the markets have been slightly haywire and interest rates have remained low. Rates have actually been fairly low for around a decade in a bid for quantitive easing. But since they have remained low and are permanently under threat of being further reduced, some consumers are wondering: is it time to consider a new investment strategy?
What are interest rates?
Interest rates are essentially dividends added to cash in a savings account. They are a way for money to make money, although with the rates so low, they are probably one of the worst investments you can make at the moment. Earlier in November, there was a threat to cut interest rates to just 0.25%, which was not passed through this time. However, with Brexit not yet in place and the autumn statement around the corner, this could still happen at some point.
What are the alternatives?
Since letting cash sit in an account will no longer allow it to accrue much interest, there are several alternatives which consistently outperform interest rate banking as a way to save money. Let’s look at some of the different ways to change your savings and investment strategy.
In times of economic instability, many people put their trust in tangible assets, such as gold or jewelry. There has been a phenomenal boom in vintage gold watches for example in recent years. This is because these type of investments are low risk. They only appreciate in value, making them a safe haven for investors. Tangible assets exist outside of traditional bank accounts and statements, which is one reason for their popularity. They are not really affected by economic factors in the same way as shares etc. The art of a good investment is knowing when the right time to sell is, which means keeping a close eye on the performance of tangible assets.
Savings bonds can offer a variety of fixed rates, making them a safe investment because you will know exactly what you will be earning as time goes by. Designed to hold your money and grow it at a fixed interest rate, bonds can be a good way to gain a greater interest than keeping money in an account. Also there is not the temptation to break into the savings, so your investment is out of your hands for a period of time.
Many people choose to invest in stocks and shares as a way of making their money work for them. This requires some sound advice and can be a really fun way to make money that typically outperforms interest rates on average. However, it can be financially precarious, particularly in times of economic change and upheaval.