Surviving on savings when rates are low.

Investors sticking to the safety of bank and building society deposit accounts have suffered as interest rates tumble.
Fortunately, investors willing to take slightly more risk with their money can achieve potentially better returns over the longer term than if their money was left in a deposit account. And this is without having to go as far as taking the higher risk of investing in individual companies where the value of your shares can vary from day to day. Risk, for the purposes of this guide, is taken as being price volatility.
With hundreds of different investments available, the type that suits you best depends on a number of things such as the risk you are willing to take, the amount of income you need (if any), when you need your money back and the rate of tax you pay.
You should always keep part of your money in an easy access deposit account to cover unexpected expenses. Some experts suggest keeping as much as 3 months net salary in the bank or building society. Do take the time to seek out one of the top paying accounts.
Over the longer term some experts argue that investing very conservatively and sticking only to deposit accounts offered by banks and building societies carries its own dangers because your money is not working hard enough and the effects of inflation can mean that your money has less purchasing power.
A good place to start looking for low risk investments is through National Savings. Details of the current range of products and rates can be found at www.nationalsavings.co.uk
Alternatively insurance companies and fund management groups provide investment products known as collective investment schemes, which offer access to many different types of investment opportunities. These products pool your money with other people's so you are able to achieve a wider spread of investments than you could buy on your own, thereby reducing your risk.
You need to make sure you are making the most of tax breaks, particularly by wrapping up your investments in an Individual Savings Account (ISA) whenever possible.
This guide hopes to demystify the majority of low risk investment products. Remember that there are no low risk investment options available that offer a high return.
An independent financial adviser (IFA) can look at your individual circumstances, review the entire range of investment options available and suggest what is best for you.

Some of the products and services offered by IFAs may not be regulated by the FSA. The value of investments can go down as well as up. Past performance is no guarantee of future performance.

'authorised and regulated by the Financial Services Act’ '189117'