I’ve felt for a while now that there’s no point in keeping my money in traditional savings accounts, as there’s simply no return at the moment. Both my husband and I worked at a bank, so we’ve always tried to stay smart with our money – filling up our stocks and shares ISA allowance and buying shares.
Following the cut to the Bank of England base rate in August, we’ve recently made changes to our portfolio by selling down quite a lot of our shares. In the past, we’ve done this periodically when we’ve wanted to buy cars and other things. We’ve always bought shares for capital growth and dividend income, and having looked at the growth in our portfolio, we realised that the profits we’ve generated will outstrip the dividends we’ll earn over the next few years, and give us ready access to our savings.
The good news is that we’re doing this without incurring a capital gains tax. We’ve been filtering our investments into an ISA over the years, which means that the profits we make aren’t subject to tax. One less thing to worry about!
But with interest rates so low and banks seemingly cutting rates all the time, we’ve got a task on our hands to find somewhere new to keep our money. At the moment, with me being 63 and my husband 67, we don’t want to tie it up for too long. We know it can’t just sit there in cash, earning nothing. We might come back to the stock market when shares are a bit cheaper – we’re always on the lookout for a bargain. But having worked in the financial industry, we’re very cautious about alternative investments – if it looks too good to be true, it probably is.
The sad thing is that these low rates don’t just impact on me – they also hit my grandson. We have a rental property, and use the funds from that to save for his education. But I’ve seen lots of banks cutting interest rates now on children’s savings accounts. We’re not the only ones to suffer.
Interest rates have to go up at some point. The government now expects people to fund their own retirement, but with such low interest rates they’re not going to be able to do that. We’ll be okay – we’ve worked hard, got good pensions and saved money. But I worry about my daughter and son-in-law and whether they might be affected by redundancies if the economy falters. When interest rates do finally go up, that’s the sign that things are getting better.