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30 Aug | How Should You Respond to the Recent Interest Rate Cut?

With inflation and the cost of living continually rising, the decision of the Bank of England to slash interest rates has caused obvious consternation in the UK. There was hardly much fat left to trim on the savings rates anyway, but banks and building societies nationwide are now trimming their rates further in order to cope with the changes. As a result of this, thousands of standard savers across the UK are being forced to react quickly and in a proactive manner if they are make the most of their earnings.

How to Respond to the Recent Interest Rate Cuts in 3 Simple Steps

With this in mind, here are three practical ideas that will help you to respond to the recent interest rate cut and protect your savings:

1. Consider Diversifying Your Investments

Over the course of the next few weeks, we can expect to see all major banks and building societies slash their rates considerably. Many have already followed this course of action, while others have deigned to withdraw their premium savings products with the highest yields.

While this means that standard savings accounts are no longer the most viable option in the current climate, there are alternative investment options that can deliver higher returns. These vehicles will help to diversify your portfolio and protect your wealth as the economic climate darkens.

2. Partner With an Expert Financial Planner

Of course, those who have minimal experience of the financial markets may struggle to diversify their activities successfully. This is unless they are willing to partner with a financial planning expert and service provider, however, who can create bespoke strategies based on their individual circumstances. This type of financial planning, when combined with wealth and investment management, can be worth its weight in gold in the current climate and as interest rates fall.

3. Consider Investing in a Managed Fund

Beyond this, stricken savers can also commit their capital to managed investment funds that deliver variable yields based on the level of risk that you are willing to take. These predetermined options include a variety of asset classes and investment vehicles, which are combined to deliver an estimated return over a period of between one and three years. In this respect these funds operate in a similar manner to high yield savings bonds, although it is important to note that some carry a considerable risk in exchange for potential returns in excess of 11% on your initial investment.

Staff Writer