With RPI hitting 5% in July 2008 and forecast to rise further i thought it was time to revisit what accounts allow
a real positive return and it is not good.
RPI at 5% means a basic rate tax payer needs a gross return of 6.25% and a 40% taxpayer needs 8.33%. If you are not getting
these rates on your current savings accounts your savings are losing value in real terms. Even many ISA's are paying less
than 5% so also bad news.
The best of the bunch for ISA's is the Market Harborough Building Society paying 6.5% on £3600 minimum. If you don't
have that amount consider the HSBC ISA paying 6.25% on minimum £1.
The best of the fixed rate bonds both require a minimum of £1000 and are ICICI 7.2% and National Counties Building Society
paying 7.11% (launches Monday 18/08/2008. These will give inflation beating returns for a standard tax payer but not if you
pay 40%.
For fully regulated regular saver accounts the best are Darlington Building Society requiring a minimum of £50 per
month paying 8% and the Chorley Building Society santa Saver paying 8.25%. Great for a basic tax payer but not so good if
you are a higher rate tax payer.
The Government backed NS&I savings certificates pay 1% plus the RPI over 3 years or five years-or 6% this is equivalent
to 10% for a higher rate tax payer so well worth considering if you can afford to lock your money up for that time.
Two others but with greater risk are the Halifax International regular saver paying 10% but as it is offshore if disaster
strikes you are not fully protected and Zopa, Zopa again has greater risk although i use it and currently over the last
couple of months an estimated return of 10% after anticipated bad debts and fees is feasible. (again you are locking
some of your money up for 3 or 5 years) If zopa interests you i blogged about it previously.
One final thought is that the Bank of England forecasts RPI tumbling next year and with swap rates falling it is unlikely
many of the higher rate fixed rate bonds will be around much longer so might be worth grabbing one while they are still available.
Having previously discussed how Retail Price Inflation is eroding the value of savings for many 40% tax payers it is
disappointing to see RPI rise to 5% today. For anyone who has not read my previous discussion on how to try to mitigate against it
please read my blog entitled "Inflation Busting Savings Accounts" dated 31/07/2008 for details of some of the accounts that
are worth considering.
Zopa UK have today announced on the lenders weekly email that they have had the best week for disbursals ever with £380,400
lent out.
Also 30 loans have already been completed in the new young markets. Finally for me it was a good week too as my average
loan on ZOPA was 12.89% after the lenders fee.
