Holding a cash buffer as part of your overall investment strategy is important, so how should you make the most of this cash that you need to hold? The interest rates that can be achieved by investing your cash in easy access accounts are becoming increasingly attractive with some of the more generous providers offering significantly higher interest rates on your money (Amelia Murray, Telegraph Money, November 2017).
For those savers that need immediate access to their savings, Birmingham Midshires is the new champion, offering 1.45% for the first 12 months, dethroning the previous highest paying account, that offered by RCI Bank, paying 1.3%.
However, be warned that this rate only applies for the first 12 months, after which, the rate drops down to a much more pedestrian 0.2%, so vigilance is required should you wish to take advantage.
If you do not need immediate access to your savings but are either risk averse overall or just for this particular portion of your liquid assets, higher rates are on offer by taking advantage of a notice account. The highest available rate at the time of publication is offered by Secure Trust Bank which offers 1.65% or 1.55% for notice periods of 180 or 120 days respectively.
This upward trend in the highest paying accounts is tempered by the fact that the rates are not on offer for an extended period of time (Amelia Murray, Telegraph Money, November 2017).
Given this, should you wish to take advantage, time is of the essence.
Once you have built up your cash levels, it's important to guard against inflation by investing the excess in line with the level of risk you are comfortable with. Holding some of your liquid investments in cash is essential, however, holding too much could lead to the erosion of your future wealth.
If you feel the need to take control of your financial future, contact Westminster Wealth Management, we can help.
The value of investments and income from them may go down as well as up and you may not get back the original amount invested.
Information is based on our current understanding of taxation legislation and regulations which is subject to change.