Stock up on better returns and protect your savings from inflation (even if you don’t use the internet)
With inflation on course to hit 5 per cent next year, the Financial Conduct Authority (FCA) has warned that 1.7 million UK savers could better protect their cash on the stock market.
Per, as inflation races ahead of savings rates, their rainy day funds will be declining in real terms.
The FCA hopes savers will consider moving their money out of the bank and into low-risk investment products. But could there be a potential hitch in this plan?
Advice: The Financial Conduct Authority hopes cash-rich savers will consider moving their money out of the bank and into suitably low-risk investment products
While DIY investing has grown, the take-up varies between generations, according to a survey for personal finance platform Finder.com.
Older people were less likely to invest: solo con 41 per cent of over-75s saying they felt comfortable doing so after the pandemic (rispetto a 60 per cent of those aged 55 per 75).
Many investment products are online only. So how can you invest if you do not use the internet?
The High Street
Investing via your bank hasn’t always been the wisest choice. In the early 2000s, the retail banking sector was rocked by controversies involving hefty fees, poor performance and mis-selling.
Adesso, anche se, the banks have offers tailored for everyday customers. NatWest, Barclays, Lloyd, Santander and HSBC have investment funds that allow customers to spread their money across shares, funds and other assets.
Many services are available online. But at Barclays and Santander customers can book a phone call with an investment planner.
Do it yourself
When it comes to investment platforms, the picture is different: with many offering offline options.
Sarah Coles, of platform Hargreaves Lansdown, dice: ‘Not being comfortable online doesn’t mean you have to rule out investing.’ The firm and other big platforms (including Fidelity and Charles Stanley) offer a more ‘old-fashioned’ investment model.
Salto generazionale: Older people remain less likely to invest: solo con 41% of over-75s saying they felt comfortable investing after the pandemic
Customers set up an account by phone, then pay into it by bank transfer, debit card or direct debit. Then you speak to a broker by phone and buy shares and funds, or send instructions by post.
The services are ‘execution only’, meaning you pick your investments. But you can read about shares and funds in newspapers. Platforms usually have their own guides, pure.
però, they may charge offline customers higher fees to cover costs. Hargreaves Lansdown charges phone or postal customers a 1 per cent fee (with a minimum £20, and maximum £50) on each order.
For online customers, the charge is £11.95 for shares and investment trusts — while funds can be bought and sold without any fees at all.
This means an offline customer investing £20,000 evenly across five funds would pay £200 more.
One alternative is to hire a financial adviser to manage your money.
Many High Street IFAs (independent financial advisers) will set up an investment portfolio (using a regulated platform) for a client, but this comes at a cost.
Most charge for an initial meeting, then an annual percentage fee based on your portfolio. Quale? says the latter can hit 1.94 per cent —about four times the amount charged by platforms: and it can affect long-term returns.
Research for platform Vanguard showed an annual fee of 2 per cent levied for 25 years could result in a loss of 40 per cent of potential returns.
Compounding means not only are you losing 2 per cent a year, you also miss out on future returns from that extra money.
It pays to think carefully before paying for a financial adviser. The firm Unbiased — which has a telephone helpline (0800 023 6868) — may be able to help you find one.
If you have some internet access, there are options. ‘An economical option is to sign up to a monthly investing plan,’ says Myron Jobson of platform Interactive Investor.
Customers set up a plan online, but then let their funds grow automatically via direct debit.
Helpful numbers: Charles Stanley: 020 3930 1236; Fedeltà: 0333 300 3350; Hargreaves Lansdown: 01179 009 000