We’re asking you, the Which? Conversation community, to help answer people’s financial queries. This month, we’re asking what you’d to with a lump of cash if you were lucky enough to have one.
It’s been a sorry few years for savers. The Bank of England base rate has been frozen at a record low of 0.5% for more than four years, and the best savings rates continue to creep down all the time.
Let’s put things in context. Five years ago, the best instant access savings account paid 6.5% in interest.
Now, savers are lucky to find the same accounts paying just 1.7% – a 73% fall drop in interest. So what do you do if you want to get an inflation-beating return on your savings? Well, you could start investing on the stock market.
Share markets have been enjoying phenomenal growth since the beginning of this year, despite the bad news coming out of the UK and Europe. The FTSE 100, for example, has just broken the 6,600 barrier for the first time since 2007.
And there are plenty of ways to tap into growth, from buying individual shares to investing in mutual funds. Whatever option you take, you’ll be taking some form of risk. But perhaps those are the lengths you need to go to to get near the returns you enjoyed just five years back?
What advice would you give?
A Which? member wrote to us recently asking for investment advice:
‘My wife and I have just sold a buy-to-let property and are sitting on £150,000. We have decided to invest £75,000 in another buy-to-let property but in a cheaper area. I’m thinking of investing the rest in Sainsbury’s, Tesco or Marks & Spencer shares. Would they be a risk? If we don’t do that, how else should we best invest the remaining amount?’
So, how would you advise our reader? Should he invest shares in well-known companies, or is it too risky to rely on them continuing to grow? How have you invested your money in the past?
We’ll be posting our own view on this investment quandary soon, but in the meantime, we’d love to hear your views and experiences.
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