What springs to mind when you think about savings and investments?
Saving for a rainy day? Collecting loose change in a jar? Hiding banknotes under your mattress? In many cases, it could be argued these are sensible strategies…
With banking interest rates falling at an unprecedented pace, both corporate and consumer savers are looking for alternative ways of raising money – and for a return on their investment.
Similarly, alternative funding options are gaining popularity as traditional bank lending remains constrained. Data released in 2013 showed banks are not using the cheap cash offered by the Bank of England to lend to households or companies.
Banks drew down just £13.8 billion from the Bank of England’s Funding for Lending scheme in 2012, well short of the £67 billion initially on offer.
Alternative investment options such as investing in commodities (gold, mobile phones or wood) and crowdfunding have grown in popularity, moving from novel ways of using savings to strategic investment options. Over the next four pages we explore why this trend has emerged and look at some of the sensible – and less sensible – ways in which consumers and corporates are using their hard-earned savings.