BY BEN ROGERS AND COLIN LAWSON
Beware of the bank Why your bank account should come with a warning Since the Bank of England reduced its base rate to 0.1% eleven months ago, many of us have seen the interest rate on our savings fall to eye wateringly low levels. You may have seen that even the generous Marcus has topped the interest rate charts recently by reopening it’s easy access account with a dizzying 0.5% AER. And with the Bank of England’s Monetary Policy Committee telling banks they should be prepared for negative interest rates over the next six months (although reiterating it shouldn’t signal that this is the intention for the future) it certainly doesn’t bode well for what you can expect on your hard earned cash anytime soon. It’s not just the low rates of interest that are of concern it’s the very real risk that inflation will erode the real value of your money.
Inflation vs volatility – which is riskier? As financial planners, we talk a lot about risk with clients and this is often characterised by discussions around volatility – how far up and down the value of your investments go in relation to the market. However, cash, unlike investment portfolios, doesn’t suffer volatility. The only time you’ll see your bank balance decrease is when you spend it.
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