Anyone with a standard savings account will be aware of the low interest rates currently being offered by banks and building societies.
Indeed, the current interest rate has sat motionless since March 2009, while some authorities believe it could drop even further. Hardly good news for savers and investors.
Little wonder then that rates of just 2-3% interest are considered good for most UK-based savings accounts and cash ISAs.
But there are ways to earn more on your savings if you’re willing to get creative or shoulder a little more risk.
Here are some of the options that die-hard savers may want to investigate…
Peer-to-Peer Lending
Peer-to-peer lending is an industry growing at breakneck speed. Here you invest money with an established platform, who then lend it out to borrowers just like you and me. Standard application and credit checks are of course carried out to minimise your risk.
You’ll find a wider range of possible targets than ever before, so take your time to check out all the alternatives. Also consider how “safe” your funds will be in the case of a default. Earnings of 5%+ can make this an attractive source of passive income for those with the funds to invest.
Mini Bonds
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Forget about boring government bonds with their painfully low rates of interest and instead consider the more limited range of “mini bonds” that offer considerably higher rates. When investing in mini bonds you’re essentially loaning a company money to facilitate their growth, so you need to feel confident about the long-term view of each company.
Additionally, note that mini bonds aren’t transferable, so you’ll likely be tying your money up for some time to get the best rates. Interest rates vary considerably from one provider to another, but as an example property investment firm Wellesley offer up to 8% interest.
Property Funds
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Investing in property has long been a favourite strategy for Brits looking to make more of their money. However with ever-more amateur investors looking for similar properties, combined with changes in taxation, it’s getting ever more challenging to find a profit-producing opportunity.
Thankfully a number of property funds promise to help amateur investors to take a small share in both commercial and residential properties.
There are a growing range of such funds, most offering buy-in from just £1,000 with estimated returns of around 8%. Note, however, that each property investment offers different returns, so for safety it may be wise to invest smaller sums into a number of properties, rather than sinking all your savings into one investment.
Venture Capital
Wealthy investors with street smarts and considerable bank accounts have long reaped the benefits of helping fledgling businesses to get off the ground. However thanks to recent developments almost anyone can get involved with such an opportunity.
Websites such as Kickfurther allow you to lend money to small businesses, who then offer a healthy return. One recent example helped a clothing company to fund the creation of additional products. They estimate an astonishing 15% profit when investing for eight months.
Car Parks
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Commercial car parks can be big money earners, especially when cited in city centres close to shopping areas and commercial hubs. Once again, while buying and operating your own car park requires considerable funds and know-how, crowdfunding lets smaller investors get a piece of the action.
Parking Direct, one such investment vehicle, claims to offer investment returns of 10-12% depending on the period of time you leave your money with them, backed by a tangible asset which has inherent value.
A Warning
In closing, it would be remiss of us not to point out that you should only invest money that you can afford to lose, and that many of the higher-earning opportunities come with increased risk.
Remember that money saved in UK bank accounts is insured up to a balance of £75,000, while you may not receive the same risk profile investing in more creative ventures.
Only you can decide whether you’re willing to consider a flutter in exchange for potentially far more lucrative returns.
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