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Ask Rachel
Working in the financial industry for over 30 years, Rachel Thrussell is the leading independent expert on UK savings products. Her views are constantly in demand from both the industry and the press.
Why is it that some cash ISAs seem to pay less than what is paid on fixed rate bonds? Surely they should be the same, with the benefit of being tax-free intended to go to the saver, not the bank?
There are a few reasons why bonds usually pay more than cash ISAs with the same term. Firstly, fixed rate ISAs have to allow access to funds and transfers out, while fixed rate bonds do not – the uncertainty that this creates for ISA providers in terms of knowing how long they will have use of the funds may be reflected in the lower rate of interest. Secondly, the need for more complex systems in order to facilitate transfers out could also mean that an ISA is simply a more expensive product to administrate. Thirdly, many of the providers at the top of the bond charts are newer banks who are fighting to establish themselves by offering highly competitive rates, but these do not offer cash ISAs.
This week's
average rates
| No Notice | 0.23% |
| Notice | 0.53% |
| Cash ISA | 0.54% |
| 1 Year Fixed Rate Bond | 0.66% |
| 2 Year Fixed Rate Bond | 0.73% |
| 3 Year Fixed Rate Bond | 0.88% |
| 4 Year Fixed Rate Bond | 0.96% |
| 5 Year Fixed Rate Bond | 1.03% |
| 11 August 2020 | |
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Gold price rises above $2,000 for first time
The price of gold has risen above $2,000 (£1,527) an ounce for the first time, as investors turn to the precious metal during these uncertain economic times.
While the stock markets have been volatile since the Coronavirus pandemic began impacting the world’s economies, the price of gold has remained strong and has increased by more than 30% this year. Along with the soaring price of gold, other precious metals, including silver, have also seen significant rises this year.
Investing in gold has traditionally been more attractive during times of economic uncertainty and with investors’ fears of the impact of the Coronavirus pandemic on economies, along with tensions between the US and China, gold could be seen as a good option when looking to diversify investment portfolios.
“Coronavirus concerns are being played out against a backdrop of recessionary fears and compounded by geopolitical worries over the US/China conflict and Brexit uncertainty,” explains Josh Saul, CEO of The Pure Gold Company. “At times like these people seek safety in an asset class that tends to increase while other asset classes fall in value.”
He added: “They are also worried about the wider economic implications of the Coronavirus pandemic, specifically the stimulus packages that have saddled the country with debt for decades to come. Others are concerned about the systemic risks for global, national and personal wealth from increased unemployment as furlough measures taper off, a reduction in GDP and both equity and property crashes.
“Our clients are not purchasing gold purely for growth. It’s a hedge or an insurance policy against risks that more than likely will affect their livelihood. The higher the risk the more expensive the insurance and with gold up by over 30% in the last six months, this is a reliable indicator of how the market perceives the world.
“We’ve also seen a 764% increase in people set to retire in the next 10 years removing exposure to equities in their pensions/SIPP to purchase physical gold in the same vehicle. These investors are concerned that they haven’t got enough time to recover the losses that have been taken from their retirement and are therefore using gold as a means of preserving wealth (at worst) and recovering losses (at best).”
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