A recent analysis by easyMoney, a peer-to-peer real estate investment platform, highlights the best investment products currently available for savers looking to secure their money before further interest rate cuts are implemented. With the Bank of England recently lowering the base rate from 5.25% to 5%, and more reductions expected before the year’s end, investors are urged to act swiftly.
Instant Access Savings see significant growth
easyMoney’s analysis reveals that Instant Access Savings accounts have experienced the largest annual interest rate increase, rising by 0.96% when including unconditional bonuses, bringing the average interest rate to 2.78%. Excluding bonuses, the rate still stands strong at 2.7%. While this is an improvement, it pales in comparison to the returns offered by other investment products such as Cash ISAs and Bonds.
CEO of easyMoney, Jason Ferrando, advises investors to be proactive: “With interest rates set to keep falling, investors are wise to get their investments in place now before we see further drops. But when you look around, neither Cash ISAs, Bonds, nor Instant Access Savings are particularly inspiring.”
Cash ISAs and Bonds offer mixed returns
For those seeking better returns, variable-rate Cash ISAs currently offer an average interest rate of 2.87%, with fixed-rate options providing even higher returns: 4.52% for a 1-year fixed Cash ISA and 4.12% for a 2-year option. Bonds, too, show competitive rates, with a 1-year fixed-rate Bond at 4.46%, though longer-term Bonds are seeing declining returns.
However, Ferrando notes that the appeal of these traditional products is waning: “Fixed-rate Bonds and Cash ISAs might offer acceptable returns of around 4%, but many of them have seen rates already start to reduce.”
Investors turn to Innovative Finance ISAs for better returns
As traditional investment products show diminishing returns, many investors are shifting their focus to Innovative Finance ISAs (IFISAs). These products offer more attractive and stable returns, ranging from 5.5% to 7.5%, with no decline in rates over the past year. Ferrando explains, “None of it looks very promising at all. And that’s why many investors are turning instead to Innovative Finance ISAs. Not only do IFISAs provide stronger annual returns, but these rates also haven’t wavered in the past year, providing investors with strong and stable returns that are difficult to find elsewhere.”
