Savers are becoming investors
Filed under: News — Tags: bonds, investing, savings —
Savers are effectively becoming investors, as banks and building societies try and lock in savers to fix term investment instruments such as fixed rate bonds.
In the general economic climate, interest on savings accounts remain subdued by the Bank of England rate policy, which aims to keep central interest rates low.
It’s not just an issue in the UK, but instead a wider one which affects offshore saving as well, due to co-ordinated efforts by central banks to maintain lower interest rates to stimulate lending.
The really interesting part of the modern savings landscape is that both banks and building societies are trying to lock savers into fixed rate bonds or fixed term accounts, so instead of instant access or notice savings accounts, they are looking for guaranteed periods of investment where the money cannot be touched.
This has to be a disturbing development, though, because in the current landscape, savers really should be able to rely on competitive savings rates, and still have access to their money. Instead, they are being asked to put up with little access and little return.
The result is that savers are literally becoming investors, but putting their money into fixed term investment instruments.
The wonder would be that more savers aren’t trying to invest more directly into the stock market, but despite the current bull run, there is little expectation of that lasting much longer.
Even still, the bond market has seen an equally strong run, so direct investing in bonds could be a realistic option for risk-averse savers, that can deliver on the rewards of direct investing.
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