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Press comment: Make the most of the lockdown savings

24 April 2020

If you’re covering the analysis from the Centre for Economics and Business Research (Cebr) showing lockdown is causing households to rise at a rapid pace please see the following comment from James Higton, financial planner at Quilter. James gives first time investors tips on how to make the most of the savings.

“There have been reams of figures and stories on the negative impact the current pandemic and lockdown is having on household finances. This is of course important, but for some people they are still finding they have more money in their pocket at the end of the month as spending is diminished.

“This analysis from Cebr shows that average monthly household spending stands £795 lower than pre-lockdown, a 30% fall, as such for some savings are increasing at a healthy rate. However, everyone’s position is different.

“This is great news as UK households are suffering from devastatingly low savings and weak financial resilience. The risk is that people should not view this as free money. It needs to be saved for the long term, not spent on online shopping or as soon as the doors are re-opened.

“While it is important to have a liquid cash buffer, with interest rates at rock bottom levels, you need to ensure that your money is working hard for it where it can. Consider opting for a stocks and shares ISA to ensure you have a long-term savings pot, as well as a more immediate one. ISA’s are a tax efficient savings vehicle that will allow your investment to grow, free of capital gains and income tax.

“ISA’s are able to hold a variety of funds, stocks and shares within them to fit the goals of the investor and they also allow easy access. For those looking to invest tax efficiently whilst retaining access to the capital, this is the investment vehicle most advisers would recommend.

“Remember the stock market is volatile and so you should place money in it for the assumption that it is going in for the long term. There are thousands of different investment assets available, from gold to government bonds, US equities to property and more - it can be a minefield.  A financial adviser is there to determine the right place to invest money dependent on your goals.

“One thing that is important is diversification. Placing your money fund that invests in different companies, shares, properties and bonds will allow you to cushion market volatility and also achieve growth in different areas. We would normally expect shares to yield the biggest growth over the long term, but if the stock market falls we may also see government bonds overtake these.”

Kathleen Gallagher

External Communications Manager

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