The rate we are saving within the UK is at it’s lowest ever since records begun.
A recent report from the Office for National Statistics has warned that the savings ratio – which measures how much of their disposable income households put into savings accounts or pensions – fell below 2 per cent for the first time since records began in 1963.
The ratio was down to 1.7 per cent in the first quarter of this year from 3.3 per cent in the final three months of last year.
What’s caused this record low?
There could be many economic factors that contribute to this 50 year low.
To begin with, the amount of money people have left in their pockets after tax and deductions has also fallen for three consecutive quarters – this the first time that this has happened for 40 years.
The minimal increase in wages in comparison to the rising inflation may have resulted in consumers dipping into their savings for day to day expenses, rather than put money away. However tempting this may be, it is a short term solution.
Another factor could be the extremely low interest rates. Recent data from Moneyfacts shows that nine out of 10 easy access savings accounts pay interest below one per cent, with a third failing to even beat the current level of base rate, of 0.25 per cent. Savers have faced a ‘never-ending battle’ to get a solid return on their cash in the last few years.
What needs to be done?
The country as a whole has faced government imposed austerity measures to tackle the recent economic turmoil, and, although we are not totally out the other side, we now need to develop a stronger culture of saving, investing and focussing on future planning with our finances.
And this includes the temptation to take advantage of the new pension reforms and cash in on any existing pensions schemes as soon as retirement age is reached.
What is the best way to save?
With most savings accounts offering barely any interest, ISAs are not only one of the best ways to gain maximum returns for your money but they are also extremely tax efficient. And each year, the government has been increasing the amount you can invest – for this tax year (2017/18) the allowance is £20,000.
And taking out an ISA does not have to mean locking your money away, with an easy access cash ISA there are no withdrawal restrictions, you can get your cash when you want it.
How do you set up an ISA?
Taking out an ISA has never been easier. You can now set up one up through our new online investment service. This will minimise your fees as there are no upfront broker costs –you can do this from the comfort of your own home and have complete control of your investments.
From registration, our service will take you through a brief risk analysis so that we can provide the ideal recommendations to suit your requirements and expectations. You can then modify your investment selections until you are happy – the whole process is simple and efficient.
Have a look at our new service on our website. If you do have any questions on ISAs or any other investments you can call one of advisors on 01892 300303.