Investing For Growth: Get out of the wasteland

With savings rates falling, it may be time to take a risk. This survey shows how to go for higher returns

NOW THAT interest rates are at 5.5 per cent it is getting harder to take a low-risk approach to your investments. The top savings accounts are paying 6.5 per cent gross (egg, 0845 600 0292) and that includes a 0.5 per cent bonus until the start of next year. If you want to fix your savings at current levels, Hinckley and Rugby BS is offering a five-year bond at 5.75 per cent gross (0800 774499).

Even a Tessa, with its tax-free returns, is only going to give you 7.40 per cent at best, and that's a "teaser" offer from the Skipton Building Society with the rate guaranteed until the end of March (0800 446776). Check the article on page 23 for more about Tessas and how they work. A Tessa is still worthwhile for many taxpayers as this chance to save pounds 9,000 tax free will be lost from April onwards when individual savings accounts (ISAs) replace the current tax-efficient regime of Tessas and PEPs. (For more about how the new ISAs will affect your savings, see page 20.)

With interest rates predicted to be at 5 per cent before the end of 1999 you may want to abandon the building society and opt for something a bit racier. You have less than two months left to take out a PEP and probably feel bewildered by the blizzard of advertising. There's no need to rush your decision but it is worth deciding now whether or not you have enough spare cash to take out a general PEP - you can put in up to pounds 6,000 - and leave this to grow for many years.

Latest research from the unit trust managers' trade body, Autif, suggests only 40 per cent of investors plan to leave their money for more than 10 years (the average is eight years). If you can invest for much longer you will find your returns are better as the main point of taking out a long-term investment is to benefit from the compound growth. As you aren't taking an income from the money you invest, all income and growth from the shares or bonds can be reinvested to increase your savings pool over many years. Before you buy a growth PEP check our feature on page 20.

Shares are the original growth investment, offering you a combination of rising share prices (you hope) and some dividends. A growing number of people want to buy shares themselves to build up a portfolio. The internet has revolutionised share dealing in the US and the UK is likely to follow. You may not have the money, time or interest to follow share prices and deal, but many people find they are hooked once they get started. If you aren't convinced, read our weekly Motley Fool column and visit www.fool.co.uk. The Fools make market commentary interesting to those who aren't impressed by jargon.

Other features in our survey look at some of the more unusual options you may not have considered. Split-capital investment trusts (page 21 ) and venture capital trusts (page 21) sound forbidding concepts, but both are extremely useful for those who have some cash to invest and don't mind taking a lot of risks.

Suggested Topics
News
people'It can last and it's terrifying'
Sport
Danny Welbeck's Manchester United future is in doubt
footballGunners confirm signing from Manchester United
Sport
footballStriker has moved on loan for the remainder of the season
Sport
footballFeaturing Bart Simpson
PROMOTED VIDEO
New Articles
Olivia Colman topped the list of the 30 most influential females in broadcasting
tv
News
Kelly Brook
peopleA spokesperson said the support group was 'extremely disappointed'
News
The five geckos were launched into space to find out about the effects of weightlessness on the creatures’ sex lives
i100
Life and Style
techIf those brochure kitchens look a little too perfect to be true, well, that’s probably because they are
Sport
Andy Murray celebrates a shot while playing Jo-Wilfried Tsonga
TennisWin sets up blockbuster US Open quarter-final against Djokovic
Arts and Entertainment
Hare’s a riddle: Kit Williams with the treasure linked to Masquerade
booksRiddling trilogy could net you $3m
Arts and Entertainment
Alex Kapranos of Franz Ferdinand performs live
music Pro-independence show to take place four days before vote
News
ebooksAn unforgettable anthology of contemporary reportage
News
news Video - hailed as 'most original' since Benedict Cumberbatch's
News
i100
Life and Style
The longer David Sedaris had his Fitbit, the further afield his walks took him through the West Sussex countryside
lifeDavid Sedaris: What I learnt from my fitness tracker about the world
Arts and Entertainment
Word master: Self holds up a copy of his novel ‘Umbrella’
booksUnlike 'talented mediocrity' George Orwell, you must approach this writer dictionary in hand
News
i100
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SQL Implementation Consultant (VB,C#, SQL, Java, Eclipse, integ

£40000 - £50000 per annum + benefits+bonus+package: Harrington Starr: SQL Impl...

Head of IT (Windows, Server, VMware, SAN, Fidessa, Equities)

£85000 per annum: Harrington Starr: Head of IT (Windows, Server, VMware, SAN, ...

Technical Software Consultant (Excel, VBA, SQL, JAVA, Oracle)

£40000 - £50000 per annum: Harrington Starr: You will not be expected to hav...

SQL DBA/Developer

£500 per day: Harrington Starr: SQL DBA/Developer SQL, C#, VBA, Data Warehousi...

Day In a Page

'I’ll tell you what I would not serve - lamb and potatoes': US ambassador hits out at stodgy British food served at diplomatic dinners

'I’ll tell you what I would not serve - lamb and potatoes'

US ambassador hits out at stodgy British food
Radio Times female powerlist: A 'revolution' in TV gender roles

A 'revolution' in TV gender roles

Inside the Radio Times female powerlist
Endgame: James Frey's literary treasure hunt

James Frey's literary treasure hunt

Riddling trilogy could net you $3m
Fitbit: Because the tingle feels so good

Fitbit: Because the tingle feels so good

What David Sedaris learnt about the world from his fitness tracker
Saudis risk new Muslim division with proposal to move Mohamed’s tomb

Saudis risk new Muslim division with proposal to move Mohamed’s tomb

Second-holiest site in Islam attracts millions of pilgrims each year
Alexander Fury: The designer names to look for at fashion week this season

The big names to look for this fashion week

This week, designers begin to show their spring 2015 collections in New York
Will Self: 'I like Orwell's writing as much as the next talented mediocrity'

'I like Orwell's writing as much as the next talented mediocrity'

Will Self takes aim at Orwell's rules for writing plain English
Meet Afghanistan's middle-class paint-ballers

Meet Afghanistan's middle-class paint-ballers

Toy guns proving a popular diversion in a country flooded with the real thing
Al Pacino wows Venice

Al Pacino wows Venice

Ham among the brilliance as actor premieres two films at festival
Neil Lawson Baker interview: ‘I’ve gained so much from art. It’s only right to give something back’.

Neil Lawson Baker interview

‘I’ve gained so much from art. It’s only right to give something back’.
The other Mugabe who is lining up for the Zimbabwean presidency

The other Mugabe who is lining up for the Zimbabwean presidency

Wife of President Robert Mugabe appears to have her sights set on succeeding her husband
The model of a gadget launch: Cultivate an atmosphere of mystery and excitement to sell stuff people didn't realise they needed

The model for a gadget launch

Cultivate an atmosphere of mystery and excitement to sell stuff people didn't realise they needed
Alice Roberts: She's done pretty well, for a boffin without a beard

She's done pretty well, for a boffin without a beard

Alice Roberts talks about her new book on evolution - and why her early TV work drew flak from (mostly male) colleagues
Get well soon, Joan Rivers - an inspiration, whether she likes it or not

Get well soon, Joan Rivers

She is awful. But she's also wonderful, not in spite of but because of the fact she's forever saying appalling things, argues Ellen E Jones
Doctor Who Into the Dalek review: A classic sci-fi adventure with all the spectacle of a blockbuster

A fresh take on an old foe

Doctor Who Into the Dalek more than compensated for last week's nonsensical offering