With the rising inflation and the FFL (Funding for Lending Scheme) interest rates have taken a nose dive and it does not look like they going to be recovering anytime soon. Many people who are reliant on the monthly dividends from their savings are going to be forced to look at higher risk assets so that they can match the amount of money earned previously.
During the budget speech recently the NS&I (National Savings & Investments) announced that they “do not anticipate being able to return index-linked savings certificates to general sale in 2013 – 14” This is not good news as people who need to generate an income often bought these certificates because they were known to pay out interest equivalent to the rate of inflation including an average of 0.5%.
Added to the bad news was that the Bank of England and the Treasury are considering cancelling the FFL scheme as banks and building societies no longer need to raise funds from saving deposits.
With all this the inflation rate has increased and the interest rates decreased so saving any money on a regular basis has become even harder to achieve and even if you are able to save you are not going to get good returns on your investment for a while yet because of the side effects of FFL.
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