Low interest rates don’t have to mean a low income
In the last 12 months, the Bank of England base rate has fallen from 5.25% to 0.50%. Those people who rely on interest from their investments have seen a massive cut in their income.
In addition, inflation is currently around 2% which means that capital is being eroded in real terms.
So, are there any ways of getting regular income from savings at a realistic level?
Fortunately, the answer is ‘yes’. There is a choice of three different ways, depending on the investor’s attitude to investment risk:
1. Dividends from shares – these are currently around 6% on average, with the potential for both capital growth and increasing income.
2. Interest from corporate bonds – falling bond prices means that 7 – 12% per annum is easily achievable.
3. Structured products – committing to a 5 year investment can mean obtaining around 7% p.a. with a high degree of capital security.
None of these investments should be considered without taking expert advice to ensure that they are fully understood. If you would like a free and no-obligation discussion about how to increase your investment income, please contact our Financial Services Partner, David Hopkinson.