Long Term Savings Accounts?

Othalian

Hi,

I am interested in placing around 30k in savings. What I would like to do is place this money in a long term savings account, say ten years plus . How good is this type of account and why are they not mentioned on this site, or at least I don't think so.

Regards

Othalian

Liz_the_Whizz

Well, lots of people have long term savings, but I can't think of a single savings account I have now which I had 10 years ago.

10 years is just too long to park your savings and leave them alone- rates change, products (and banks ) come and go, and millions of pounds languish in savings accounts paying way below inflation which people think they can rely on in the future.

Many people do use products with reasonable time horizons (eg National Savings Index-Linked Certficates of 3 or 5 years), but longer time horizons are more of a gamble. Who knows what the Bank of England rate will be later today, never mind in 10 years time.

The best thing if you do not want to actively manage your money is to put it in a savings account with a rate guarantee (eg Icesave & ICICI to 2011). Also, 1 year Fixed Rate Bonds offer just below 7% gross at present, and you can fix for longer but you run the risk that variable rates will do better. National Savings Index-Linked certs are worth a look depending on your tax position.

But you really should review things periodically to ensure your money is doing the best it can.

Aegis

Long term savings aren't covered because most people don't really want to tie up their savings for that long, and those that do mostly want a better solution than a standard savings account for 10 years.

I'm not sure if there are any, but longer term fixed-rate bonds might be available from some banks, though I doubt the rates would be much more favourable than normal savings over that time.

If you're in for 10 years you might want to consider investing instead of savings. Over 10 years you could invest in a range of gilts, corporate bonds, unit trusts/OEICs/investment trusts, direct equities or VCTs (risk levels roughly running from low to high there) or a whole range of other products designed to grow your capital above interest rates.

neilp

I would second the comments on considering investments. It is worth looking at websites such as www.bestinvest.com and www.h-l.co.uk to see the range of products available, as well as relevant articles on this site. It may also be worth talking to an independent financial advisor.