Is it worth wait to see if interest rates rise, rather than invest in a fixed 3 year savings account

george4064

CheekyMikey said:

Put it in Chase and get 1.5% and see what happens in the next month…I’m also expecting better fixed rate deals in May

My thoughts exactly, at least get the cash earning interest in the highest paying easy access account.

bostonerimus

Rob_Canniff said:

I have a five figure sum sitting in a bank account doing nothing. Up to now I haven't invested it in a savings account or ISA because the annual interest return would have been so low (£100?) that I just wasn't motivated to do it ( I realise now I should have just got on and done it).

Now that interest rates are on the rise, and because I am pulling my finger out more generally I was intending to invest the sum in a 3 year fixed saving account in order to maximise interest (2.5%).

However the interest rate has pretty much doubled (?) since I last looked at investing about a year ago. And interest rates only seem to be going in one direction (i've just read a prediction that BoE base rates will rise from the current 0.75% to a peak of 2.0% in a year's time).

So it has just occurred to me that perhaps I should only invest for a shorter term (2.1% for a year or 2.4% over two years) and then see if there are newer savings options with higher interest rates?

I'm not asking anyone to give me specific financial advice. But I'd be grateful if anyone could let me know of any holes in my logic re. only investing for a year in anticipation of higher interest rate offers (I realise there are no guarantees re. interest rates). Am I missing any other considerations?

Thanks

1) Cash doesn't necessarily do nothing. It is useful as an emergency fund and just to help with the cash flow required to live.

2) You shouldn't be trying to come up with some strategy based on what you think interest rates might be in the future. You should use basic personal finance strategies. So maximize your tax advantages accounts ie pensions and ISAs and if you want to put money in long term savings just set up a ladder of 1,2,3 or even 5 year accounts. This will take the guess work out of it.

Rob_Canniff

Thanks everyone for your advice. Much appreciated!

Overall comments seem to support my impression that it's worth waiting to see where interest rates go in the coming months, rather than commit now to a long term fixed saving. And I note in particular that Chase has been suggested as a good option for short term investment at least. A 'ladder' strategy also sounds like good advice.

In answer to one comment, I have absolutely no intention to make use of the money for some years to come, and I note that Stocks and Shares ISAs were recommended in this respect.  However I have absolutely no knowledge of what I should invest in so that would be pretty high risk for me. I just wouldn't know where to start. I'm guessing that if I took financial advice as to where to invest, the cost of the advice would probably outweigh any resulting profits. But to be honest that's just a guess.

bostonerimus

Rob_Canniff said:

Thanks everyone for your advice. Much appreciated!

Overall comments seem to support my impression that it's worth waiting to see where interest rates go in the coming months, rather than commit now to a long term fixed saving. And I note in particular that Chase has been suggested as a good option for short term investment at least. A 'ladder' strategy also sounds like good advice.

In answer to one comment, I have absolutely no intention to make use of the money for some years to come, and I note that Stocks and Shares ISAs were recommended in this respect.  However I have absolutely no knowledge of what I should invest in so that would be pretty high risk for me. I just wouldn't know where to start. I'm guessing that if I took financial advice as to where to invest, the cost of the advice would probably outweigh any resulting profits. But to be honest that's just a guess.

Don’t postpone, you should not wait. Split the money in to thirds and set up a ladder now.

Albermarle

Rob_Canniff said:

Thanks everyone for your advice. Much appreciated!

Overall comments seem to support my impression that it's worth waiting to see where interest rates go in the coming months, rather than commit now to a long term fixed saving. And I note in particular that Chase has been suggested as a good option for short term investment at least. A 'ladder' strategy also sounds like good advice.

In answer to one comment, I have absolutely no intention to make use of the money for some years to come, and I note that Stocks and Shares ISAs were recommended in this respect.  However I have absolutely no knowledge of what I should invest in so that would be pretty high risk for me. I just wouldn't know where to start. I'm guessing that if I took financial advice as to where to invest, the cost of the advice would probably outweigh any resulting profits. But to be honest that's just a guess.

Many people on this forum started out knowing zilch about investments . Like any subject it seems a bit daunting at first but the basics of investing are not rocket science, and I suggest you start to do some reading. 
You could do worse than regularly reading this and the pensions forum. Lots of newbies ask basic questions and get answers.
Also have a look at these links .

 Investing in stocks for beginners: how to get started - MSE (moneysavingexpert.com)
Get Started With Investing at Hargreaves Lansdown (hl.co.uk)
How to invest in a stocks and shares Isa: The quick and easy guide | This is Money

CheekyMikey

Rob_Canniff said:

Thanks everyone for your advice. Much appreciated!

Overall comments seem to support my impression that it's worth waiting to see where interest rates go in the coming months, rather than commit now to a long term fixed saving. And I note in particular that Chase has been suggested as a good option for short term investment at least. A 'ladder' strategy also sounds like good advice.

In answer to one comment, I have absolutely no intention to make use of the money for some years to come, and I note that Stocks and Shares ISAs were recommended in this respect.  However I have absolutely no knowledge of what I should invest in so that would be pretty high risk for me. I just wouldn't know where to start. I'm guessing that if I took financial advice as to where to invest, the cost of the advice would probably outweigh any resulting profits. But to be honest that's just a guess.

Your nervousness about stocks and shares is totally understandable…many people will probably recommend you to diy to save adviser fees and to simply buy a global tracker fund. Without knowing any more about you, your objectives and the size of your investment, that is probably a good shout. You might feel more comfortable keeping say 60% of your cash in a fixed rate account and only committing 40% to a tracker to help give the cash a little more boost towards that inflation figure, obviously being aware of the increase in risk. Ultimately the best decision for you it’s what you feel happy with and what doesn’t keep you awake at night. Good luck.

Rob_Canniff

Albermarle said:

Rob_Canniff said:

Thanks everyone for your advice. Much appreciated!

Overall comments seem to support my impression that it's worth waiting to see where interest rates go in the coming months, rather than commit now to a long term fixed saving. And I note in particular that Chase has been suggested as a good option for short term investment at least. A 'ladder' strategy also sounds like good advice.

In answer to one comment, I have absolutely no intention to make use of the money for some years to come, and I note that Stocks and Shares ISAs were recommended in this respect.  However I have absolutely no knowledge of what I should invest in so that would be pretty high risk for me. I just wouldn't know where to start. I'm guessing that if I took financial advice as to where to invest, the cost of the advice would probably outweigh any resulting profits. But to be honest that's just a guess.

Many people on this forum started out knowing zilch about investments . Like any subject it seems a bit daunting at first but the basics of investing are not rocket science, and I suggest you start to do some reading. 
You could do worse than regularly reading this and the pensions forum. Lots of newbies ask basic questions and get answers.
Also have a look at these links .

 Investing in stocks for beginners: how to get started - MSE (moneysavingexpert.com)
Get Started With Investing at Hargreaves Lansdown (hl.co.uk)
How to invest in a stocks and shares Isa: The quick and easy guide | This is Money

Thanks for going to the effort of providing the links. Much appreciated and I'll take a look

Rob_Canniff

CheekyMikey said:

Rob_Canniff said:

Thanks everyone for your advice. Much appreciated!

Overall comments seem to support my impression that it's worth waiting to see where interest rates go in the coming months, rather than commit now to a long term fixed saving. And I note in particular that Chase has been suggested as a good option for short term investment at least. A 'ladder' strategy also sounds like good advice.

In answer to one comment, I have absolutely no intention to make use of the money for some years to come, and I note that Stocks and Shares ISAs were recommended in this respect.  However I have absolutely no knowledge of what I should invest in so that would be pretty high risk for me. I just wouldn't know where to start. I'm guessing that if I took financial advice as to where to invest, the cost of the advice would probably outweigh any resulting profits. But to be honest that's just a guess.

Your nervousness about stocks and shares is totally understandable…many people will probably recommend you to diy to save adviser fees and to simply buy a global tracker fund. Without knowing any more about you, your objectives and the size of your investment, that is probably a good shout. You might feel more comfortable keeping say 60% of your cash in a fixed rate account and only committing 40% to a tracker to help give the cash a little more boost towards that inflation figure, obviously being aware of the increase in risk. Ultimately the best decision for you it’s what you feel happy with and what doesn’t keep you awake at night. Good luck.

Thanks for your understanding of where I am, and for taking the effort to spell out some advice.