Cash Savings & Comparison Website

With inflation falling, cash now offers better real returns. In addition increasing competition for cash savings is leading to higher interest rates and better terms, for example on accessibility or not employing temporary bonuses. These attract customers with high interest which tumbles to a paltry rate after six months or a year at the end of the bonus period. Deposit takers have historically relied on customer apathy not to move monies. Shockingly many accounts may be offering rates as low as 0.1% gross or 0.5% p.a. gross. Do you know what you are getting on your cash savings?
 
With the market hotting up it is now a good time to review the interest you receive on your cash accounts. I know shifting money can be a hassle but it is worth the time with large deposits. For example if you can secure an extra 1% p.a. gross interest on £50,000 this equates to £500 before income tax. Not to be sniffed at. Further with rates on the best accounts paying around 3% p.a. if you are receiving 0.5% p.a. currently the reward for the effort of switching is a no brainer.
 
A further incentive to consider savings now, applies to those seeking to use Cash ISA allowances for 2011/12. Time is running out before the end of the tax year. To this end I wish to recommend a comparison website I have learned about – www.savingschampion.co.uk . Whilst there are other good sites such as MoneyFacts and Moneysupermarket that I have referred clients to, this one is refreshingly simple with excellent content, high clarity of display and ease of use. The two female founders also have a background working with IFA firms, Anna Bowes as an adviser so I guess that is an added attraction for me.
 
Please note Montgo Consulting Ltd does not verify the accuracy of the content or take responsibility for third party websites

Equity Markets Rally

You will have noticed that equity markets have rallied in recent weeks. This is due in part to the European Central Bank (ECB) firing its “big bazooka” at the end of December, with unprecedented buying of government bonds and injecting liquidity into the financial system. The result has been a very large reduction in sovereign bond yields, notably in Italy and easing of bank funding pressures. At the same time positive economic data from the US including falling unemployment has cheered the markets. However frequent comments have been made that central bank and government fiscal measures to address the EuroZone debt crisis has merely been kicking the can down the road, meaning the symptoms, such as liquidity and access to credit are being treated not the underlying causes. There is simply too much government debtedness which will not go away overnight.

The UK has just been placed on negative watch by Moody’s with a risk that its coveted AAA credit rating faces a potential downgrade in the next 18 months. However the UK is in a stronger position than many developed economies for various reasons. Firstly much of our debt, in the form of government bonds or gilts is long dated and therefore the UK does not face short term refinancing pressures like other economies. Secondly there is more scope in the UK for the use of “financial repression,” which are processes designed to keep bond yields low. An example of a tool for this is Quantitative Easing (QE). This reduces the cost of government borrowing, making debt repayments easier and also contributes to inflating an economy out of debt. Despite the UK’s safe haven status the key problem with the UK is anaemic economic growth.

To date the crash in global stockmarkets that I feared in the autumn has not materialised. However given the observation above that the underlying causes of the EuroZone debt crisis have yet to be addressed the capacity for a shock remains. Right now I am happy to remain in cash although I am pondering other low risk assets for my pension funds.

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