Deposit Accounts – If you are lucky enough to be an existing customer or have an address in the UK you can have a bank account that offers interest.
Currently the best providers are Hanley Economic Building Society which is offering a whopping 2.85% on between £100 and £33,000. This is some way out in front of other providers, but take note; it is a VARIABLE rate so they could reduce the interest at any time. The strange thing about this account is that you must apply online but can only manage your account via post or in branch – this will be very awkward for many.
The best of the rest now is the Newbury Building Society offering 1.6% on up to £1,000,000 – again this is a variable rate.
If you want a fixed return and can forgo access, National Savings Guaranteed Growth Bond is paying 2.2% for three years. The providers are typically similar and can be compared to suit your needs, this information from Comparethemarket .com.
If you are currently limited to a Spanish provider you will not even be able to get 1% now, unless you are willing to tie your money up for 18 months. I saw one client recently who has just had their interest reduced after the 18-month period at 0.5% to 0.01%. Yes 0.01% which means you will get the princely sum of €1 interest after one year if you invest €10,000.
In the current climate, deposit accounts should be used for emergency money only because the rates offered often don’t even match inflation. One way to combat inflation is to put money away for some sort of term. I would be wary of fixing for a long term too as there is a possibility that interest rates could soon rise and you might find yourself locked into a poor rate.
Spanish Compliant Bonds – Rates vary and depend on the size of investment. Prudential offer a Cautious Fund that is currently paying growth rates of 4.8% for Investments in Euros and 5.5% for investments in Sterling. This type of investment is great for people wanting medium to long term income or growth. 5% of capital is allowed to be withdrawn each year penalty free. These offer very good tax benefits but are only available if you are a Spanish Fiscal resident.
Shares – These are a bit of a gamble but do offer an attractive longer term approach. Dividends are paid to give you income (which in the FTSE 100 for example can get you an average of 2.5 Growth of your investment can also be provided by the performance of the company in which you bought shares.
If you are not an expert, it is often best to use a Fund that provides a basket of shares and they have experts to do the picking for you. At Blacktower we have partnered up with Quilter Cheviot in London to offer the Nexus Dynamic Portfolio. 2016 saw growth on this fund of over 14%.
There are other investment vehicles such as Annuities, Structured notes, unit-linked or unit trust funds but then we are going up the risk ladder and usually a fully Qualified Financial Adviser will be involved. Remember, when selecting your investment options, everything is okay in moderation and putting all your eggs in one basket can lead to trouble.
In today’s financial climate it is essential you do everything you can to make sure your money is safe and secure and then, what you want to transpire in the future has the best chance of happening.
Blacktower Financial Management (Int) Ltd is licensed in Gibraltar by the Financial Services Commission (FSC) and is registered with both the DGS and CNMV in Spain