The second is by playing the derivatives market to increase the bank’s income on deposits. Third, Halifax/BoS is relying on the Bank of England base rate rising, which will make the 6 per cent less attractive. And finally, there is taking an initial loss, known euphemistically as “investing in the product”.Only the first of these is sustainable, while there may be continuing derivatives opportunities. But the smoke and mirrors lie in the fact that it has been manufactured using four hidden ingredients.One is by keeping costs to a minimum. The fewer the frills, such as a cheque book, or the greater the number of strings such as notice periods or minimum regular deposits, the higher the rate of interest. For those who can save regularly and not touch their money for a year, the Halifax/ BoS 6 per cent is hard to beat, unless you have a mortgage or other debt and can benefit from an offset account.
Higher-rate taxpayers end up with only 3.6 per cent, so they would be better off with a Marks & Spencer mini-cash Isa paying 4.5 per cent.The 6 per cent before tax is on the table and is as guaranteed as Halifax/BoS can make it. So far ING has stuck to its guns, paying a generous 4.3 per cent without the strings attached to the Halifax/BoS account, so let us hope Mr Sinclair does not have to eat his words.The important point is that savers now have a range of places to deposit their money and earn rates of interest comfortably in excess of the latest 1.4 per cent annual inflation. Ask what real value the IFA adds for his up-front commission and decide if you can afford to pay it.”Brokers such as Allenbridge and Bestinvest publish much of this research free.They also provide proprietary research on topics such as relative fund performance and the arrival or departure of star fund managers. One of the best Isa guides, Isa Direct, comes free from Allenbridge and you can download it from its website or request a copy by post.Bestinvest and Ample offer free data, including best-buy lists. Then you had to know which of many conflicting strategies would pay off best over the balance of the year, and throw in good calls on the bond market’s reversal in early summer, the continuing strength of property and house prices and the further strong showing of the pound against the dollar through most of the year.Such perfect timing is almost impossible to achieve, though the LBS professors point to the coincidence, if such it was, that the bottom of the bear market was marked almost to the day by the yield on shares rising above the yield on bonds for the first time in many years.
They have come on the heels of worthwhile internet and telephone offerings from First Direct, Egg and Intelligent Finance, as well as the previous market leader, ING Direct.It was a delicious irony to see Lindsay Sinclair, ING’s chief executive, accusing the new competitors of offering an unrealistically high rate to sucker people in, the very suspicion which was levelled at ING when it emerged. While it owes much of its effect to smoke and mirrors, the new Halifax and Bank of Scotland 6 per cent Regular Savings Account will shake up the market. It has already stung the competition and should prompt comparable products, which will benefit consumers. But you can get much of what you require for this from discount brokers, so why pay more?”.
“Two key issues for investors are fund volatility relative to their peer group and asset allocation, or having a balanced portfolio. Transfers can be made directly between fund managers within the same Isa wrapper. Discounts on up-front commission may also be available.’You can get what you need’ from discount brokers’Anne Charlton, an office manager, has built up an Isa and Pep portfolio with retirement in mind. “I use a discount broker only when I’m investing into an ISA, because initial charges have such an impact on long-term performance.
