Inflation Beating Savings Plans
"Even though National Savings & Investments (NS&I) has withdrawn its index-linked savings plan, you can still find a home for your savings with the potential to beat or track retail price inflation (RPI). In the table below you will find several plans aiming to achieve this. These plans have full capital protection from UK banks.
|Provider||Plan||Deposit Taker||Potential Return||Term||More Info|
|6 Year Defensive Deposit Plan||Investec Bank plc|
at end of term
|6 years||More Info >|
|FTSE 100 Kick Out Deposit Plan||Investec Bank plc|
|More Info >|
These are structured deposit plans and are capital protected. There is a risk that the company backing the plans or any company associated with the plans may be unable to repay your initial investment and any returns stated. In this event you may be entitled to compensation from the Financial Services Compensation Scheme (FSCS) , depending on your individual circumstances. In addition, you may not get back the full amount of your initial investment if the plans are not held for the full term.
If you are at all unsure of the suitability of these types of investments, both in respect of their objectives and risk profiles, you should seek independent financial advice.
|Provider||Plan Name||Deposit Taker||ISA Option||Term||Maximum Potential Return||More Info|
|FTSE 100 Kick Out Deposit Plan||Investec Bank plc||Up to|
|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 5% times the number of years the plan has been in force. Also available for Cash ISA and ISA transfer.|
Compare and find our best savings plans
Savers worried about the effects of inflation on their savings should shop around to ensure they are getting the best returns they can on their cash. With retail price inflation measured at 5.6% in September 2011 (Source: Office of National Statistics) means conventional instant access and fixed rate bonds currently on offer at the time of writing are struggling to ensure that your money maintains its value in real terms.
The above inflation beating plans provide alternative solutions to conventional fixed rate bonds and are worth considering.
How does inflation impact savings?
The economic definition of inflation is the sustained rise of the price of goods and services over a period of time. A good way to think about the impact of inflation on the buying power of your money is in terms of a “shopping basket” of goods and services that you typically buy in a given month. While the impact of inflation may be difficult to see month on month over a period of years the erosionary effect on the buying power of your pound can be clear to see. For example the average cost of a loaf of sliced white bread (800g) in 1999 was 51p and in 2009 this cost had risen to £1.26, a rise of 147% (Source: Office of National Statistics).