ALMOST a third of investors are keeping their money in a traditional savings account as they are unaware of the alternatives or think they are too risky, research claims.
A BondMason poll of more than 1,000 investors with more than £25,000 of investments – to coincide with the tenth anniversary since interest rates were cut to record lows – found savers were losing out on decent returns due to inertia.
The research found nine per cent of respondents were unaware of the alternatives to bank savings accounts and 22 per cent thinking all other options are too risky.
In responding to the low interest rates of the past 10 years, 23 per cent said they had tended to invest more in shares, 15.5 per cent had tended to invest more in fixed-term bonds, 8.2 per cent had tended to invest more in property, and 14.5 per cent had actually increased the amount of money they hold in the bank.
“There was a small Bank of England base rate rise in August to 0.75 per cent, even with further increases it will still be way short of the five per cent rate we were enjoying at the start of October 2008, and we don’t expect it to move above two per cent in the next five to eight years,” Stephen Findlay, chief executive of BondMason, said.
“Any further increases will be good for savers, but I don’t expect to see a return to bank accounts paying a decent positive return on savings any time in the foreseeable future.
“My message to the millions of people with large amounts languishing in the bank waiting for better times is to instead to speak to a financial adviser and also start doing your own research. Otherwise, if you leave it there another 10 years, you may well find the value of your savings has reduced even further through the hidden effects of inflation.”