Savers Feel the Pain

The pitiful state of savings has been voted the biggest financial worry – ahead even of falling house prices and soaring unemployment.

Repeated cuts to the base rate have decimated returns on savings, while carnage on the stock market has left many Brits desperately searching short of options for their cash.

This is reflected in a recent survey published on Every Investor, which found that almost one in four 24% people rank the low interest rate environment and a lack of savings and investment opportunities as their biggest concern.

Unfortunately for savers, there was little in the Budget speech to indicate improvement in the near term. With the government desperate to increase revenues, there's no scope to remove tax on savings interest.

Job security 23.3% and falling house prices 19.4% are the next biggest fears.

One in nine 11% say the government's rampant spending concerns them most, while the prospects of inflation 3.9% or deflation 3.8% came out as the least worrying for respondents.

So where should you put your savings?

For those who need access to their money, you need to be prepared to earn a far lower rate of interest.

Research shows the average access account pays a rate of just 0.65%, although you can earn up to 2.5% with the best accounts see our best buy tables.

The news is certainly a lot better for those able to lock their money away for a year or two. The average return on fixed rate bonds is around 2.9%, but there are a number of accounts paying over 4%.

As always, make sure you keep your savings below the £50,000 threshold with each banking group to ensure your money is covered by the government's savings guarantee.
 

Moneyextra.com recommends you take independent financial advice before acting on any article

2009-04-27 10:19:25 © Moneyextra.com