February 8, 2010

Most People Would Not Invest Cash In 0.5% Environment – Put It In Offset

Thanks to the Bank of England deciding to keep interest rates at 0.5% for the 11th month in a row, 76% of investors have had enough of dismal savings rates and say they are not interested in investing in cash.

Fair Investment has found more than three quarters of investors would prefer to put their money into riskier investment options in the hope of better returns than put it into a savings account or an ISA.

Nick Scarrett, head of pensions and investments at Fair Investment says: “With the average cash ISA rate at just 2.12% and easy access savings accounts paying out just 0.76% on average, it is no wonder that most people looking to invest are steering away from cash in order to get better returns.”

It’s sad that people are forced to move their money into risky investments for any sort of return. The problem is, the riskier the investment the greater chance of losing money. For people who rely on their savings for income, that’s unacceptable.

When asked what type of investment product they were most likely to opt for almost half of those respondents choosing structured products. This is incredible – structured products have hit the headlines over the last few months thanks to their high risks. These investments are complicated, risky and while some have returned a lot of money to investors, many people have lost everything in them.

Fair Investment also says nearly a quarter of investors would choose equity funds, while a fifth said they would opt for corporate bond funds as their preferred investment type. While these are slightly safer, there few guarantees with such investments.

The only place you can be sure that your money will remain safe and will make money each and every month is through an offset mortgage. The low rate environment actually makes them an even better investment because the goal of an offset is a lower rate at the end of the month, which means a lower repayment and more money saved – it’s a reverse savings product, but one that works and more importantly, one that is safe.

SOURCE: Fair Investment, 04/02/10

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