Low interest rates force savers to take risks Go compare with our comparison table

Low interest rates force savers to take risks

10 August 2010 / by Rachel Mason

The base rate being stuck at 0.5% and savings rates averaging just 1.63% is forcing savers to take risks, according to recent research.

A survey by Fair Investment Company has revealed that savers frustrated with low rates on savings accounts are prepared to take more risk with their cash in hope of better returns.

The firm found that 69 per cent of those polled said they won't consider investing in cash while rates remain so low, and will instead opt for higher risk investments.

Fair Investment Company found that most would opt for structured products over cash, which they say is 'understandable' as structures offer "a way of moving into riskier assets while keeping a level of capital protection"

Of the 69 per cent who would not be looking at cash, 55 per cent would go for structures; other investment options respondents said they would choose included equity funds (14%) and corporate bond funds (16%).

Nick Scarrett, head of investment and pensions at Fair Investment Company said "The average savings rate is currently just 1.63% while the average cash ISA rate is 2.07%. Even the top rates aren't paying much over 4% when you fix for 5 years, so it is not really surprising that savers have had enough of earning such little interest on their cash."

He continued, "structured products are often popular with investors looking for higher returns than on cash savings but not willing to take the risks involved with stock-market investing. And with the financial climate as it is, and rates more likely to fall further than increase, a diversified investment portfolio including some structured products is certainly worth considering."

 

 Product NameISA OptionMaximum Potential ReturnTermMore Info
FTSE 100 Enhanced Kick Out Planyes

10%

per annum

Up to
6 years
More Info >
Structured investment plan with the potential to mature after years 1, 2, 3, 4, 5 or 6. If the plan matures early it will return 10% times the number of years the plan has been in force. Also available for Stocks & Shares ISA and ISA transfer.
FTSE 100 Defensive Kick-Out Planyes

7.75%

per annum

Up to
6 years
More Info >
Structured investment plan with the potential to mature after years 3, 4, 5 or 6. If the plan matures early it will return 7.75% times the number of years the plan has been in force. Also available for Stocks & Shares ISA and ISA transfer.
Kick Out Deposit Planyes

3%

per annum

Up to
6 years
More Info >
Capital protected deposit plan with the potential to mature after years 3, 4, 5 and 6. If the plan matures early it will return 3% times the number of years the plan has been in force. Also available for Cash ISA and ISA transfer.
FTSE Defensive Kick Out Planyes

7.30%

per annum

Up to
6 years
More Info >
Structured investment plan with the potential to mature after years 2, 3, 4, or 5. If the plan matures early it will return 7.30% times the number of years the plan has been active. Also available for Stocks & Shares ISA and ISA transfer.
4 Year Deposit Planyes

12%

at end of term

4 yearsMore Info >
4 year capital protected structured deposit plan which aims to return 12% if the FTSE 100 is higher. Also available for Cash ISA and ISA transfer.
6 Year Defensive Deposit Planyes

24%

at end of term

6 yearsMore Info >
6 year capital protected structured deposit plan which aims to return 24% if the FTSE 100 is higher than 95% of Initial Level. Also available for Cash ISA and ISA transfer.
FTSE Step Down Kick Out Planyes

7.30%

per annum

Up to
6 years
More Info >
Structured investment plan with the potential to mature after years 2, 3, 4, or 5. If the plan matures early it will return 7.30% times the number of years the plan has been active. Also available for Stocks & Shares ISA and ISA transfer.
Retirement Deposit Planyes

3.75%

per year, plus 22.5% at end of term

6 yearsMore Info >
6 year capital protected structured deposit plan which pays 3.75% annually from capital with a potential 22.5% at the end of the term if the FTSE 100 is higher. Available for Cash ISA and ISA transfer.

The value of investments and any return from them can fall as well as rise and you may not get back the full amount invested. Please ensure that you read the Important Risk Information below.