If you
are fed-up with low interest on savings (0.25% p.a.), how would you want your
cash to work?
Britain’s
largest finance advice group, Hargreaves Lansdown, has introduced a new service
that allows small savers to buy high-interest corporate bonds. The retail bonds
could pay up to 11.2% p.a. The key is to invest directly in a business venture
that hopefully does not go bust. Bonds in Halifax pays 9%, Aviva is paying 8.3%
and Goldman Sacs pays a “coupon” of 6.5%. The low interest environment may last
for some time. It is therefore good to re-assess the risk-return continuum.
Image:
https://businessadvice.co.uk
Corporate
bonds, cash individual savings account (“Isa”), fixed-rate bonds, government
retail bonds, premium bonds, dividends from shares, equity income funds, P2P
lending are some of the options or products available in the U.K. Some of these
(or their equivalents) are not available in Malaysia. And the insurance
vehicle, PIDM, is focussed on deposits with banks. So there is room for its
expansion. Also, there are options for the Government to garner retail funds
for development. Disintermediation will happen with any new product introduced.
If a
“fair” structured retail return of 3-5% is set for 1-3 year money, a retail
PIDM guaranteed bond will have overwhelming interest. Banks are so
focused on margins and bankruptcies; they will neglect savers. It is time for
a new party to step-in and change the landscape. If not the Government, then it
has to be a “Dana” or a PNB-type investment arm.
Reference:
10 Ways to Improve the Returns on Your Savings, Patrick
Collinson, 17 February 2012, The
Guardian
No comments:
Post a Comment