Best cash savings strategy for next few months & the new Budget

cashferret

I'm going to have to choose where to put my elderly, ill mum's savings over the next year as her various bonds mature. One large one just did mature today and she's depending on me now to make all her financial decisions!

I'm not used to dealing with bonds and am wondering whether I should be avoiding putting her money in anything that will fix the rate for a year, given that interest rates are predicted to go up.

Also, I'm not financially savvy and don't understand whether the cuts expected in tomorrow's budget will lead to banks offering different rates (lower? higher?).

Should I rush to put her money back into fixed-rate accounts or should I park it somewhere instant access for a bit and see what happens? What is likely to happen?

I'm talking cash savings here, not stocks and shares - my mum is too elderly for the latter to be appropriate.

I'd be very interested to hear what people think and hope others will benefit too - I expect many of us would like others' views on this!

fairtrade

I don't know that rates are likely to rise in the short term. The LIBOR rate ( the inter-bank lending rate) is still fairly high and banks need to offset costs against offerings. Also many measures in the emergency budget will not be felt fully in the next 6-12months. So a fix for 12months would be fairly safe.

Mickygg

I agree with Fairtrade that rates, although expected to increase, may not go up for a while, and when they do they will probably be small amounts, not enough to rock the savings world a great deal, possibly until well into 2011

However this is just my opinion, obviously rates could rocket from next month! But I doubt it...

What I would say though is that fixed terms for 12 months are at an all time low at the moment because everyone wants them. I believe the highest one is 3.25% fixed for a year with Punjab bank. You would probably be best sticking to an instant access account with no hidden penalties, such as the AA, which offers 2.8% gross.

My recommendation would be to stick with instant access for now and see what happens in coming months. Rates are really only a bit better if you fix for 2 or more years.

cashferret

Thanks, both - I agree that two-year rates don't look very attractive. I'm now trying to find good instant-access savings a/cs that aren't basically HBOS! Apart from Santander (terrible reputation for how they treat customers) they seem to be hogging the good rates but under lots of different names and I'm conscious of the £50,000 protection limit.

Thanks for your advice - you've reassured me that keeping flexible for the next few months is a good strategy.

Mickygg

http://www.moneysavingexpert.com/savings/savings-accounts-best-interest

This should help you a bit - scroll down and there lists the best instant access accounts available at the moment. Maybe Egg will suit you.