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Why save?

There are many reasons why people hold savings and there is no right or wrong answer as to how you should save.

Ultimately, we recommend everyone should try to have some cash behind them, just in case circumstances or plans alter unexpectedly, ascash at these times can be invaluable in making sure the smooth running of regular household or lifestyle expenses.  What is alarming is some of the statistics around just how little savings a lot of the UK population have.

• 1 in 10 Brits (9%) have no savings at all
• A third of Brits have less than £600 in savings

The household savings ratio expresses how much of the average household’s income is being invested in savings products.  Very simply, households do three things with their money; they pay taxes and interest on debt, they purchase goods and services (normally referred to as consumption), and whatever is left is saved or invested.  In 2021 the household savings ratio is currently forecasted to be around 10%.

Clearly over the last 10-12 years the landscape of savings has altered.  With low interest rates continuing to frustrate savers, there is a continuing challenge as to how to provide a return that is capable of competing with inflation.  At the present time, inflation is running around 3% which means when struggling to achieve a savings interest rate of 2% or less, there is a concern for a lot of savers that the buying power of cash savings is actually going backwards and not keeping pace with the cost of living.

Despite these challenges, the reasons to save remain valid where some people save for a certain purpose such as, home improvements, retirement, holidays, new car, further education or simply to provide a ‘rainy day fund’ for support.

How do you save?

It is most common to use banks and building societies for savings along with National Savings products such as Premium Bonds.  There are also different types of accounts, such as term deposits, ISA’s, variable rates and fixed rates to contend with so the options can be wide reaching.

Over the last 18 months, the savings position for many has increased with hobbies and interests impacted by COVID and a lot of people have had surplus income.  Other than DIY garden buildings and bar’s being popular in lockdown, 13 million Adult ISA accounts were subscribed to in 2020, up from 11.2 million subscribed to in 2019.  This clearly shows there is a desire for people to save and try to make their money work as hard as possible.

We often get asked how to ‘make my money work harder’ and what options have the potential to provide some protection against inflation.  Deposit based savings undoubtedly have their place, however where there is potential to allocate capital for the longer term, investment based options could be considered to provide both greater growth or income potential.  Investments don’t come without risks, but over a longer timeframe, investments would generally expect to return more than a deposit based savings account and compete with or beat inflation rates over time.

Every client is unique, that is why when you sit down with one of our Financial Advisers, we explore all of the options which could potentially be right for you.  We make sure we provide a clear structure to your savings plan that provides both degrees of security and depending upon a client’s views, the potential to invest over the longer term using pensions, ISA’s or investments.  It means a great deal to us that we know our clients, we take the time to understand them and their financial position, so that we can offer them the confidence they are making the right investments for their future.

For further advice on savings and investments we have a team dedicated to help you.  You can contact them here.