Interest rate rise won’t end worry for savers


Interest rates have, at last, moved above their multi-year low, providing a little relief to savers, although with many saving institutions opting not to pass on the full 0.25% increase in the base rate, the benefit for many will be marginal. Combine this with a rate of inflation that is currently running well above interest rates, and those who are sitting on large cash balances are likely to see the 'real' value of the cash

they hold continue to fall. The good news for savers is that Mark Carney, Governor of the Bank of England, has indicated that there will be further rises in interest rates to come. The bad news is that he has indicated that the pace of interest rate rises will be slow (he has pencilled an interest rate of 1% by 2020!) and does not expect interest rates to rise to the levels seen at the peak of previous cycles. The only real comfort for savers is that he is likely to be wrong, like many before him, as real-life events show up the expensive modelling tools for what they are; ‘educated guesswork’.

Not withstanding that, it is not difficult to see why those who have accumulated cash, for example through an inheritance, business sale or by simply saving hard, are left in something of a predicament; how can they generate enough of a return to at least maintain the real value of the capital they have saved and, for some, how can they generate an income on top of this that beats the paltry rates on offer from their Bank or Building Society? As my co-director, Andrew Cockerill, highlighted in the last edition, the double-edged sword of years of 'Quantitative Easing', combined with record low interest rates has served to inflate the price of all assets, from house prices to stocks and shares. The result of this is that finding investments that offer value has been an increasingly difficult task and one best left to the professionals.

"Having a team of Chartered financial advisers to help with the ‘what?’ and the ‘how?’ of investing and Chartered investment managers to help with the ‘where?’ and the ‘when?’ leaves us pretty uniquely placed in Northamptonshire."


As a firm, we have long believed that establishing a diversified portfolio helps to achieve the appropriate balance between risk and return, and is particularly important at a time when the valuations of some asset classes are looking stretched by historical standards. As a result, our focus is on maintaining a disciplined, but still very much bespoke, approach to financial advice and investment management, rather than following the tendency of many firms in our sphere to move to the ‘one size fits all’, impersonal ‘model portfolio’ approach. This is one of the reasons why, I suspect, our services have been in ever increasing demand for a number of years. Having a team of Chartered financial advisers to help with the ‘what?’ and the ‘how?’ of investing and Chartered investment managers to help with the ‘where?’ and the ‘when?’ leaves us pretty uniquely placed in Northamptonshire, particularly if you take into account the years of experience we have within these teams and the century or more of pedigree of the firm as a whole.

Cave & Sons remain one of the country’s longest-established, independent firms of investment managers, financial advisers and stockbrokers, having traded in Northamptonshire for 111 years. We like to think that the reason we continue to stand apart from the crowd is by offering tailored financial planning and investment management solutions at a competitive price and the success of this approach is attested by another year of strong demand for our services.

Should you wish to discuss any of the above commentary in further detail, or would like to discuss your investment strategy in general, then please contact our investment management team on 01604 621421.

The value of an investment and the income from it could go down as well as up. You may not get back what you invest. This communication is for general information only and is not intended to be individual advice. Cave & Sons Ltd is authorised and regulated by the Financial Conduct Authority. Financial Services Register number 143715.