How to make your money work hard for you in the fifth year of 0.5% record low interest rates

04 Mar 2014

How to make your money work hard for you in the fifth year of 0.5% record low interest rates

• and its media panel of professional advisers give their top tips on savings, investments, mortgages and financial planning

This week marks five years since the base rate was first held at the record low of 0.5%. As uncertainty grows over when the Bank of England will raise interest rates, read top tips from, the ‘find an adviser’ search, on reviewing your finances and making the most out of the current low interest rate climate.

1.    Suffering from interest rate inertia? - Karen Barrett, Chief Executive at, comments:
“As the fifth anniversary of the base rate falling to 0.5% passes, people need to be thinking about how they can make the most of the low rate while it’s still with us.  There are opportunities out there for people to make their money work hard in the low interest rate environment. Whether it’s paying off more of your mortgage, taking advantage of low lending rates to reduce debt, using up tax-relief allowances, or drip feeding more into investments. Being proactive with your finances can pay dividends, quite literally, and regularly reviewing all of your finances is a good habit to get into.  

“Those who aren’t confident in making decisions about their money or don’t have the time to be monitoring their finances would benefit from seeking advice from a professional adviser.  A whole of market financial adviser can look at your entire financial situation and come up with a suitable strategy to fit your long-term goals. Don’t let another year go by without reviewing your finances or ensuring your money is working as hard for you as possible. For a free and confidential search for a financial adviser or accountant, go to”

2.    What should I do with my savings? - Claire Walsh (Pavilion Financial Services)
“You should always try to hold some cash savings as an emergency fund - typically 3-6 months living expenses, but beyond this if you are holding large sums in cash then the value of your savings will be eroded due to the low interest rates which are trailing inflation.  If you want to get above inflation rate returns you will need to take some sort of risk with your money.

“For cautious investors who are comfortable tying their money up for a few years, I would suggest they consider structured deposits.  These guarantee 100% of your capital and a return based on the performance of an index such as the FTSE 100.   For example, one available at the moment tracks the FTSE 100 and offers an annual return of 4.85% if the FTSE achieves certain levels over the next six years.  These products offer a potential to get above inflation rate returns, without the same risks as being fully invested.  Structured products are quite complex and I would always recommend that someone obtained financial advice before investing.”

3.    What should I do with my investments? – James Robson (Plutus Wealth Management)
“It’s important that people understand the difference between investing and saving.  Investments need a five year time horizon – really anything less than this is saving. When it comes to investing, long term trends are far more important than short term movements and trying to predict a rate rise is like trying to time the market or second guess the weather.

“I would encourage everyone to review their investments [or savings] at least annually – it doesn’t need to take a long time. Asking a few simple questions can make a huge difference to your financial planning:
-    What are my plans for this money over the next 12 months, 3 years, 5 years?
-    Do I understand what I have saved or invested and where it is?
-    Do I need access to any of this money?”

4.    What should I do with my mortgage? – David Hollingworth (London & Country Mortgages)
“The obvious tip is to protect against future rate rises by locking into a fixed rate.  With the base rate at a record low and competition in the mortgage market much improved there are some very attractive deals that can save borrowers money not only now, but also in the future by protecting against rate hikes.

“Some of the real winners in the last few years will be those that have made low rates work harder for them by trying to pay off their debt more rapidly. Those on tracker mortgages who saw their rates plummet would have made a serious dent in their mortgage if they had maintained their monthly payments.  There’s still time to start making overpayments now in preparation for when rates start to rise.  Having the discipline of allocating a larger slice of your monthly budget to the mortgage payment will help the adjustment and of course a smaller mortgage will make higher rates easier to deal with.

“Of course low rates are bad news for savers and so overpaying debt or perhaps using an offset mortgage is likely to give a better return on cash.  Offset mortgages allow the interest on the mortgage to be cut but there is still easy access to the cash which is held in a separate savings account.”

5.    How else can I put my finances in order? – Lorreine Kennedy (Carematters)
“Set some financial goals! If interest rates do rise, there may be many people who struggle.  If you think you would struggle then this tip is of particular importance. It could be as simple as saving money for a purchase, finally sorting out your pension, or deciding to clear your debts – this one may be the hardest of all. Do a thorough budget plan, and look at the areas that you can change. Then stick with it.”


Notes to editors:

For more information contact:

Emily Falla / Kate Aitchison: 020 7294 3682

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Category: Financial Planning Tagged: Interest rates

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