The expectation is that we will see further rises this year, perhaps a further 0.25% as soon as August!
In the UK however, rates remain at their historic low with some commentators predicting another year before we see an upwards trend Â– only time will provide the answers.
Increasing interest rates are usually good news for savers but with such small increments, the dilemma of chasing secure, sustainable income, with security of capital remains as elusive as ever.
There have been many investment products offering guaranteed returns with attractive looking rates of income but often the guarantee has been subject to the performance of a stockmarket or several markets with a reduction in capital on maturity if certain circumstances have been breached. These are known as structured products and you should check the small print and make sure that you really understand the risk you are taking before parting with your money. For the person relying on income from capital, they are very often the least able to tolerate any reduction in capital value as this will lead to lower income in the long run.
There are however a small number of investment funds which take a different approach, that are not linked to stock markets and do not rely on prescribed circumstances applying to fulfil their objectives. Some of these funds can be considered as low risk but as they are not deposit based investments, they should only form a part of a portfolio which is aiming to generate income, although returns of up to 8% a year are possible to achieve with a potential for bonus payments as well with some funds.
As with all aspects of financial planning, there is no one answer to suit everyone and individual circumstances should be considered before committing to any investment programme. If you are concerned at the level of investment income you are achieving and want to find out how you could improve this, contact us today for a free consultation.