There was a time when we all thought banks were infallible. Sadly, we now know that’s not true. It’s exactly ten years since the credit crunch when some of the big banks had to be bailed out.
You might know about the FSCS scheme that resulted. It’s designed to protect up to £85K in any one financial institution, in case the firm fails.
If you have a lot of cash savings, say £200K or more, you therefore have to spread it about a bit. As you know, we’re always on about diversification!
(Unlikely as it may seem, there are occasions when you might have that amount of cash lying about. Let’s say you’ve just sold a house to downsize. Or taken advantage of your pension drawdown facility. Or inherited a lump sum.)
So where are the best places to invest your cash?
People whinge that bank savings rates are rubbish at the moment, and that you’re lucky to get 0.5%. That’s true. But there is another option.
There are an increasing number of challenger banks to choose from, as well as the High Street names we all recognise. And because challenger banks are trying to build their balance sheets, they offer rates that are up to 20% higher than traditional banks.
You don’t have to worry that your money is with a bank you’ve never heard of, because as long as the bank is covered by the FSCS scheme, your cash is protected just as much as it would be in a famous High Street bank.
What this means to you
When you have a large amount of cash to deposit, you have to choose the right banks to put it into.
However, it is more difficult than ever to open a new bank account. It seems they don’t just want your passport details and your mother’s maiden name, they also want your inside leg measurement too!
Not only that, but you also have to keep reviewing where your cash is held, and then move it about to benefit from ever-changing rates.
It’s an onerous task.
So here’s how we handle clients’ cash here at Plan 100.
We have handpicked two active cash managers, Insignis Cash Solutions and Dynamic Cash Management. For a fee, they do the heavy lifting on your behalf. They do all the due diligence to recommend which banks are best to hold your cash, ensure your savings are always covered by FSCS protection, and actively move your money around when necessary to get the best rates.
As with the other Plan 100 services, cash management facilities like this free you up to focus on the other things you’d like to do with your life.
It’s got to be better than leaving your cash under the mattress.
P.S. These active cash management providers (and others) can look after your business cash deposits as well as personal cash.