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The old saying that 'it's an ill wind that blows no-one any good' has yet again been proved to contain more than a grain of truth, this time in the aftermath of the Northern Rock debacle. Many investors have not unsurprisingly decided that the stricken company is not a safe place for their savings to be held, and as is well known, queues of investors immediately formed, all anxious to get their hands on their funds and out of harms way. Inevitably, whilst an incautious few have probably not taken any further action, satisfied that they have done all that is necessary to safeguard their money, the wiser majority would appear to have looked around the market place.
Many have taken the (possibly short term) option and put their cash into building society accounts, perhaps whilst they check out the other options open to them. Others will have taken a look at the vast variety of companies offering an even greater selection of investments, and wondered just which way to jump. Reports indicate that, whatever their choice, what is certain is that there has been a massive influx of funds into savings accounts; one source quotes the extra investment for the tail end of 2007 at £5 billion.
It is a reasonable guess that a proportion of this total will not have found its final resting place, but will be moved on (where the terms permit) to other, apparently better paying investments. Some investors are reported to have used 'spare cash' to pay off home loans with the intention of reducing their monthly outlay. The alternative route taken by many has been to put their lump sums into offset mortgages, although brokers London & Country do point out that the differential in interest rates makes it necessary to have a 'reasonable' sum available to invest. However, it is necessary to bear in mind that the main advantage to be gained from an offset mortgage is in an earlier pay-off date, coupled with the current tax-free status of off-setting.
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