Senior doctors struggling to find inflation-beating savings
Despite the media fanfare surrounding the launch of NISAs in July, the current interest rates available on cash make this savings option appear less attractive. Senior doctors will find it very difficult to find accounts, even tax exempt, that exceed the rate of inflation.
Although the CPI (consumer prices index) rate of inflation has fallen recently and rests at 1.6 per cent (down from 1.9 per cent in June), savings are still shrinking in real terms as the best variable cash ISA interest rate is around 1.5 per cent.
At present, it seems banks do not need to rely on savers’ deposits to fund their lending and are obtaining cheaper funds from other sources. They are happy to make their accounts less appealing to existing and new customers.
The rate cuts do not just affect the new ISAs opened last month. You should check all historical bank accounts. What interest rate are you getting now and is it time to switch? Banks realise that we all suffer from inertia when it is time to switch.
Bank of England governor Mark Carney recently implied a base rate rise could arrive in spring next year leading to a normalisation of rates around 3 per cent. We should remember that interest rate changes are not possible to predict in advance although much media space is taken up in this pursuit.
If we focus on the areas of our finances we can control we should all ask ourselves “can our excess funds be working harder for us elsewhere? Do we have the right investments in place to secure long-term financial stability?” To discuss your objectives in confidence, call one of our specialist advisers at Cavendish Medical on 020 7636 7006.