Savings: Inflation falls, but don't get complacent about your savingsInflation has fallen to its lowest level since 2010, but that shouldn’t be a reason to get complacent about your saving, because interest rates seem to be falling too.

Current levels of inflation

The rate of inflation fell last month, with CPI (Consumer Prices Index) falling to 2.8% and RPI (Retail Prices Index) dropping to 3.1%.

Whilst this undoubtedly represents good news it shouldn’t mean we get complacent about our savings, they still need to work hard to make sure they get a real return.

Our advisers can help you get your savings working harder for you

The Investment Sense team of Independent Financial Advisers in Nottingham

Contact our team of advisers today:

0115 933 8433

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Why do your savings need to beat inflation?

Getting an inflation beating interest rate on your savings, whether they are held personally, in a business or a SIPP is vital if they are to maintain their buying power.

When most of us think about risk our thoughts naturally turn to volatile stock markets and the risk of losing money on equity, or similar, investments. Using deposit accounts eliminates this type of risk, but introduces inflation risk, which will erode the buying power of your savings each and every year that the interest you receive is below the rate at which prices rise.

The effects of inflation can be startling; a £50,000 lump sum would have its buying power reduced by just under £10,000 over 10 years, with just a 2% difference between the rate of inflation and the interest received.

How to get your savings to beat inflation?

Shop around This might sound obvious, and it is, but many of us don’t shop around for the best savings interest rates and leave money languishing in uncompetitive accounts. If we could shout this from the rooftops we would, shop around, it’s vital and not doing so almost guarantees your interest rate will be uncompetitive

Bonus rates Many new savings accounts, particularly those offering instant access, include a bonus rate to attract new savers. These bonus rates can be attractive, but once they are removed the default interest rate tends to be extremely uncompetitive. Some savers like bonus rates, and we see nothing wrong with them, providing you know they are there (we make it obvious on our best buy tables which accounts have them) and that you shop around once the bonus comes to an end.

Tax free savings As Jimmy Carr will confirm, the less tax you pay the more of your money you get to keep! Now we don’t all need to use complex offshore arrangements to save a bit of tax on our interest. We can simply use Cash ISAs or, if we are part of a couple, arrange our savings so they are held in the name of the lowest rate tax payer. Basic planning such as this can make all the difference when you are trying to get your savings to beat inflation.

How can Investment Sense help you?

Our website contains a huge amount of information to help you find the best savings interest rates.

Best buy savings accounts tables These are free to use, you don’t even need to register, they contain information on 28 different types of savings accounts from Cash ISAs to fixed rate bonds, business deposit accounts to Junior Cash ISAs. Click here to be taken to our best buy savings accounts tables

Inflation Watch This section of our website shows you what interest rates you need to beat current levels of inflation depending on whether you are a nil, basic or higher rate taxpayer. Click here to visit Inflation Watch

Accounts in Focus New savings accounts are launched on almost a daily basis, working out whether they are right for you and offer value for money can sometimes be hard. In the Accounts in Focus section of our website we review new savings accounts and give them the thumbs up, or sometimes the thumbs down. Click here to visit the Accounts in Focus section of our website

SIPP deposit account best buy table This provides SIPP investors with a comprehensive list of over 100 deposit accounts specifically designed for SIPPs. Click here to visit the SIPP deposit account best buy table

Advice Our team of Independent Financial Advisers in Nottingham are experienced in advising all types of savers on their cash options, if you would like advice on your options call one of our IFAs today on 0115 933 8433, alternatively enquire online or email

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