Academics approximate returns to cash by resorting to treasury bill or money market rates. But what might a savvy UK investor have achieved with money in the bank?

Monevator is devoted to DIY investing after all, and so an everyday cash savings index would better reflect the experience of individual investors. It would also form a useful reference point for future expectations.

And so without further ado (I’ve always wanted to say that!) I present the Monevator cash total returns index.

A UK cash savings index

Our new cash index tracks the total return of UK savings accounts based on monthly interest rate figures going back to 1900.

I’ve relied upon three sources:

• Pre-November 1939: the Bank of England’s A Millennium of Macroeconomic Data.
• November 1939-March 2004: the Building Societies Association’s BSA Yearbook.
• April 2004-present day: Money Saving Expert’s amazing email newsletter archive.

My profuse thanks and additional hat-tips go to Monevator readers Alan Stocker, who suggested using the BSA and MSE sources, and Snowman, whose ongoing comments provided the motivational juice to plough through scads of dusty old interest rate records.

I’ll explain the decisions I’ve made in constructing the index at the end of the article. But first it’s high time I presented the facts on cash savings in the UK.

Spoiler: they’re not pretty.

The money illusion

The green cash uplands shown in the graph below represent the comforting sight of interest piling on interest. But the wavy red line that goes more or less nowhere is the return on cash after inflation:

Data from Millennium of Macroeconomic Data for the UK, ¹Building Societies Association (BSA) Yearbook, Money Saving Expert, and ONS. April 2026.

The annualised real return on UK cash savings is 0.1% for the period 1900-2025. Miserable!

It’s a performance that stacks up poorly against other mainstream asset classes:

• The money market annualised return is 0.4% (0.3% after fees)
• All stocks gilts is 0.8% (0.7% after fees)
• World equities is 5.6% (5.5% after fees)

In a nutshell, those returns and the chart above explain why we urge readers not to put everything into cash. The green stuff barely scrapes past against inflation over time.

Of course cash is not the worst place to be over some shorter periods, as we saw in 2022. And there are good reasons to always keep some readies in reserve.

However holding a large wedge will likely cost you as the years turn into decades.

The silent hissing of a slow puncture, or the quiet boiling of that unlucky frog come to mind.

Hard times

The next chart highlights cash’s longest losing streaks in real terms – including a 72-year whopper:

We’ve shared some godawful charts over the years on Monevator. But this one is right up there.

The red zones show you the length and depth of cash drawdowns, as viewed through inflation-adjusted googles. They demonstrate that cash can be a perilous place to store your wealth if you overly rely on it.

The same is true of all asset classes, admittedly. But cash is deceptive because it looks so stable in nominal terms.

However as the chart shows, cash can periodically inflict huge losses – and the culprit isn’t hard to find:

As we’ve all experienced lately, the cash-gobbling monster of inflation isn’t a blight that’s faded into history like smallpox, or grit in your codpiece.

Cast your eyes back to the cyan growth line in our chart above. Cash has only performed well in real terms over a few short periods: namely 1921 to 1933 and 1982 to 2008.

On both occasions you could have done better in bonds.

The not-so-flash crash

Here’s the full drawdown chart for cash’s nastiest ever bear market.

The record shows:

• Cash spent over 72 years in negative territory
• It took 48 years to sink to the bottom
• Losses peaked at -58% in April 1981
• The recovery took another 24 years until December 2005

Money markets experienced similarly severe losses. UK government bonds suffered an even deeper, if shorter, drawdown. (See our previous retelling of the tale of the UK’s worst ever bond market crash. Prepare a stiff drink.)

Essentially, successive UK governments failed to control inflation. That wrecked the real returns from fixed income assets.

The red gouge above partly explains why my grandparents – born around 1910 – were so hard up. All they had were savings with the Post Office. But whatever they put away was murdered by inflation. Especially in the early 1940s, the early 1950s and, most savagely, in the 1970s.

Yet go back to the first chart in this article and cash’s nominal return curve betrays no hint of these losses that lasted a lifetime.

Cash after the Global Financial Crisis

Let’s fast forward.

The competitive savings market we enjoy today was unknown to previous generations.

British savers had few options until the cosy arrangements of our banks and building societies were broken up by deregulation from 1987 onwards.

Two decades later, the retail savings market was flourishing on the eve of the Credit Crunch, as documented by Money Saving Expert’s empowering weekly emails.

Easy-access rates topped 6% as the first rumbles of the oncoming storm rolled across the consumer landscape in 2007. ²

But within a few months, Britain experienced its first retail bank run in 140 years. Keystone institutions teetered, and the economy locked-up.

The Bank of England cut rates to historic lows, and real cash returns fell into the red:

Since January 2009, cash has been under water for all but one month up to the time of writing. That’s 17 years of drawdown and counting.

The chart shows that cash wasn’t a save haven either when interest rates were slashed to near-zero, nor when they rebounded post-Covid.

Indeed, the jagged plunge to the latest cash trough (-15% in May 2023) was a direct consequence of the 2021-23 inflationary surge. The only good thing about cash during the recent cost-of-living crisis was its drawdown wasn’t as bad as bonds.

Frankly, neither cash nor bonds are the place to be when inflation breaks loose.

Please read our previous hunt for the best inflation hedge for more.

Conflict of interest

Before I embarked on this project, I had thought a fleet-footed saver may have beaten money market rates. But the data says otherwise.

The next chart shows how British savers have mostly lagged the official Bank of England rate since 1900. (Money market returns usually track the central bank rate like a lovelorn teenager):

There’s a lot of economic history packed into this chart, but the takeaway is that savers have only outperformed the going rate during two eras.

One was upon the outbreak of World War 2 up until Churchill’s re-election as Prime Minister in October 1951.

The other shows up in the MSE era of consumer choice from 2004. Up until the Global Financial Crisis, the green cash rate tracks ahead of the red Bank Rate as savers were offered very generous terms – the likes of which haven’t been seen since.

The Bank Rate is then slashed from 5% in September 2008 to just half-a-percent by March 2009, as the scale of the crisis became clear.

Still, if you kept your job, a chunky rate tart’s premium emerged as different banks and building societies needed to suck in cash periodically to balance their books.

Switching to whichever institution was most in distress at the time was perhaps not my soberest ever financial move (reader, I was a rate tart) but hey, the British Government was playing backstop so it seemed okay.

In my view though, the savvy saver’s edge has hardly been worth the effort since 2022, though the premium perked up a little in 2025 – as you can see at the tail end of the chart.

Inside the cash total return index

There were a surprising number of decisions to make in assembling the index – specifically in the MSE-powered ‘best buy’ era.

The most important thing to say is that the index is composed of the compound interest rates for short-notice savings deposit accounts.

Up to October 1939 – We use the ‘Interest rate on sight deposit accounts’. The Bank of England defines a sight deposit account as:

…where the depositor has access to the entire balance of the deposit, without incurring any penalty, either on demand or by close of business the day following that on which the deposit was made.

November 1939 to March 2004 – Interest figures come from the rates on ordinary shares accounts provided by the Building Societies Association. An ordinary shares account was just a standard savings account accessible using a passbook. (Ask your grandparents. Or me! I had a Post Office passbook account from childhood until I looted it as a desperate 21-year-old trying to make rent.)

April 2004 to present day – The best interest rate collated by Money Saving Expert at the end of each month, provided the account fulfils the following criteria:

FSCS protected (or European equivalent schemes prior to Brexit).

95 days or less notice required. This provision bears comparison with historical treasury bill rates which are typically for 3-month bills.

Introductory rates are included so long as they last at least six months.

Exclusions:

Cash ISA accounts due to historically severe caps on balances.

Fixed term rates – these accounts are subject to interest rate risk.

Accounts that limit withdrawals to fewer than 12 per year or impose interest rate penalties for withdrawals.

Minimum deposit requirements of greater than £1,000 or a maximum balance of less than £85,000.

Current accounts, because they’re typically subject to restrictive terms and conditions including tight caps on bonus interest rates.

Exclusively postal or in-branch accounts.

Cash back bonuses.

Tax rates and fees as per standard practice for indices.

The notional saver

Indices by definition are based on a set of guidelines that simplify the real world in order to produce a snapshot of a market.

The Monevator cash total return index is based on what a switched-on UK retail saver could have earned on liquid cash savings from 1900 to the present day.

My notional saver paid attention to rates and moved their money to the best available product. But they did not use exotic or highly restrictive products.

They’re not the average saver, but neither do they have unlimited time and the motivation to pursue every savings avenue either.

Crucially, the index needs to be comparable with retail investment opportunities where an investor can commit almost as little or as much as they like to any given asset class.

For that reason, I’ve only admitted accounts that allow for low minimum balances and high maximum balances.

I’ve also ruled out fixed-term savings because they contain embedded interest rate risk. ³

In the modern era, financial institutions have come up with every wheeze they can think of to top the best-buy tables for long enough to hit their targets, whilst avoiding attracting so much cash that it craters their bottom line.

So I’ve had to filter out much of that fiendishness in order to balance the features of a genuinely desirable cash product: liquidity, accessibility, and competitive interest rate.

Finally, I’m not making a claim about what any individual could have earned. The index is beatable if, for example, you took term risk at the right time, or used interest-boosting techniques like current account stacking.

(Current account stacking enables a saver to jack-up their return – and partially circumvent balance caps – by opening multiple accounts that pay sweet rates of interest on restricted amounts of cash. Perhaps you opened ten accounts, perhaps you opened 20. It was a viable strategy for juicing your cash returns in the ZIRP era. It didn’t move the needle as much as I hoped when I ran the numbers, though. But that’s another story.)

Alright, that’s it for now. I’m very much looking forward to the thoughts, reactions, and critiques of the Monevator Massive. And I reserve the right to adjust the index in light of any bright ideas you have!

Take it steady,

The Accumulator

1. Thomas R, Dimsdale N. 2017. “A Millennium of Macroeconomic Data for the UK.” Bank of England.
2. You could even bag yourself 8% on balances of up to £2,500 via an Abbey National current account.
3. That is to say, adverse interest rate moves will leave you stuck in an uncompetitive product from time-to-time.

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What caught my eye this week.

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Perhaps, like Frank, you’ve had too few regrets to mention. But unfortunately, when it comes to investing, I’ve had plenty.

About what I invested in, and what I didn’t. About when I bought, and when I sold.

Unfortunately, it seems those regrets, and my fear of future regrets, can play havoc with my investment decisions. According to Daniel Kahneman in Thinking, Fast and Slow:

Investors are prone to regret, and the anticipation of regret shapes much of their behavior.

And from Hersh Shefrin in Beyond Greed and Fear:

Regret aversion – the tendency to avoid decisions that could lead to regret – often leads investors to make poor choices.

How then am I to take reasonable decisions with my investments?

Am I just a rabbit frozen in the headlights of my future regrets? Or are there some practical steps that will help me sleep at night?

Minimise regret

It’s comforting to know that Harry Markowitz, the Nobel-prize-winning economist who developed Modern Portfolio Theory, suffers from the same challenge.

Markowitz once said in an interview:

“I should have computed the historical co-variances of the asset classes and drawn an efficient frontier. Instead I visualized my grief if the stock market went way up and I wasn’t in it – or if it went way down and I was completely in it. My intention was to minimise my future regret. So I split my contributions 50/50 between bonds and equities.”

Perhaps the best way to minimise future regret is simply to make fewer decisions.

Decisions, decisions

A good reason to avoid investing in active funds (aside from the fact that they will on average underperform an index tracker) is the number of decisions it requires.

Possible future regrets are manifold. Did I choose the right market? The right investment style? The right manager?

And if I start to regret any of those decisions then I’m facing a timing problem. Do I cut my losses now or do I hold on in hope of a turnaround?

According to Michael Pompian in Behavioral Finance and Wealth Management, the odds of me making the right call are not good:

The fear of regret keeps investors from buying when prices are low and from selling when prices are high.

Conversely, investing in a global tracker requires just one decision: to invest in equities. There’s a lot less to stress over. A lot less to regret.

The key is simplicity.

Keep it simple

I greatly admire the analysis by The Accumulator on the Slow and Steady and No Cat Food portfolios. I’m sure they would lead to good outcomes.

The question is, can I be trusted to manage that many separate elements?

I fear not.

My penchant for analysis means I will be tempted to revisit the asset split every time I rebalance. That temptation will inevitably lead to bad decisions.

As Oscar Wilde’s Lord Darlington observed: “I can resist everything except temptation.”

Sticking to just two or three funds – or even a single multi-asset fund – means I have fewer temptations to fiddle.

Fewer moving parts in a portfolio means fewer decisions to make.

Avoid extremes

It’s harder to think about future regrets when markets are high and rising, and too easy to get caught up in maximising my imagined future returns.

But investing 100% in equities, or bonds, or bitcoin, leaves me susceptible to regrets when, at some point, the market inevitably moves against me. A more moderate strategy allows me to remain sanguine about such moves.

As Morgan Housel suggests in The Psychology of Money:

Avoid the extreme ends of financial decisions. Everyone’s goals and desires will change over time, and the more extreme your past decisions were the more you may regret them as you evolve.

It’s not about removing all risk. Just think through the possible outcomes and how you’d feel about each.

Good enough

The bulk of my portfolio is dominated by global trackers, Vanguard LifeStrategy, short-term gilts, and cash.

It’s not perfect. I’m not sure it’s even logical. I have too much cash, my fees could be marginally lower, and I would likely have better returns with more equity.

But, for me, it’s more important to avoid regret and stick to a reasonable plan than to have a perfect portfolio.

So it may not be the best option but it’s almost certainly good enough. As Charlie Munger told us, good enough is just fine:

It’s remarkable how much long-term advantage people like us have gotten by trying to be consistently not stupid, instead of trying to be very intelligent.

Change your mind

However much I try to simplify things, there are inevitably going to be times when I change my mind.

And that’s okay. Mistakes happen and things change. Even good decisions can produce bad outcomes. Don’t sweat it. Morgan Housel again:

Embracing the idea that financial goals made when you were a different person should be abandoned without mercy versus put on life support and dragged on can be a good strategy to minimise future regret.

Break some rules

Notwithstanding all the wise quotes above, I frequently allow myself to break all the rules.

If I want to experiment with private equity, or I have a hunch that infrastructure is going to be a winner this year, then why not have a punt? I can make some mistakes and learn some lessons.

Provided I don’t invest enough for serious regrets to kick in then no harm done. It may even help me leave the main part of my portfolio alone.

The final curtain

Maybe you’re completely logical – the T-1000 of investing. Maybe you can calculate the most efficient portfolio and mechanically rebalance every year according to your finely tuned allocation until the Grim Reaper is at your door.

But personally – and I suspect along with many people – my anxiety over future regret means I don’t always make the best investment decisions.

What’s more, I’m not actually expecting this to improve. In my early investing journey, mistakes were relatively easy to accept with a shrug. But as I begin to rely more on my investments for income, the levels of regret anxiety rise further. There’s less opportunity to put things right.

The behavioural psychology books may exhort me to overcome my investing weaknesses, but that’s easier said than done. In the real world, the best I can do is try to avoid them by minimising future regret.

Non, je ne regrette rien (nearly…)

I may never reach full investing Edith Piaf. But to summarise I find it helps to:

• Take fewer decisions
• Avoid extremes
• Keep it simple
• Aim for good enough, not perfection

I often return to that earlier quote from Harry Markowitz. The fact that someone so steeped in investment analysis could take such a simple and broad-brush approach speaks volumes. It gives me hope that maybe I’ll do okay after all.

Investing will always involve uncertainty. But if I can make peace with a few inevitable regrets, my finances stand a better chance of being good enough.

I guess the sign-off should be something about doing it My Way, but I can’t quite bring myself to write it.

So I’ll just say, may your decisions be few – and your regrets fewer still.

The post Regrets, I’ve had a few appeared first on Monevator.

I needed help to sail these seas. Among the competing offers I found a trusty vessel named index investing.

While you can complete the journey in expensive luxury liners like actively managed funds or in a one-man skiff tossed hither and thither by your own stock picking, here are five reasons why a more modest-seeming vehicle – a portfolio of index funds – makes the most sense:

1. Index investing is simple

Never invest in anything you don’t understand is a repeated mantra in personal finance. Like never crossing the road between parked cars, it’s excellent advice that’s all too easy to ignore.

Happily, index investing is easy to understand, even for those with little investment experience.

• You use simple index tracker funds or Exchange Traded Funds (ETFs) to construct a diversified portfolio that keeps your eggs in many baskets.

• You make regular contributions to your funds and rebalance your portfolio as little as once a year. (Some prefer never).

• Holiest of holies: You don’t try to time the market or pick hot stocks.

2. Index investing works

Index investors will beat the average active investor after costs and taxes, according to Nobel Prize winners like William Sharpe and legendary investors like Warren Buffett.

Study after study shows that most actively managed funds are trumped by index funds over the long-term. Why? Because index trackers are dirt cheap. Their low costs nibble away less of your pie than pricier active funds, which rarely put in the consistently stellar performance required to justify their high fees.

Index investing is not a ticket to instant riches. It doesn’t aim to beat the market, but rather to capture the returns of the market. We’re putting our money on the tortoise, not the hare.

3. Index investing is affordable

Cheap index trackers can be bought from online brokers and held there for very little if you pick the right platform. You can buy in small, regular chunks and build up your portfolio slowly over time.

With a bit of confidence and self-education you can manage it all yourself. This means you avoid paying commission or fees to a financial advisor.

4. Index investing doesn’t waste your life

Stock-picking hoovers up vast amounts of time. Index investing leaves you free to sniff the roses. There’s no need to grapple with complex methodologies, pour over company accounts, or entangle yourself in charts.

5. Index investing puts you in control

Ever hire a dodgy financial advisor only to discover later you’re paying sky-high fees for mediocre funds that didn’t suit your needs? (Or was that just me?)

Knowledge of index investing strategies can help you avoid a similar fate by revealing:

• The risks you’re taking and how to dilute those risks to a level you’re comfortable with.

• How much you need to invest to achieve your financial goals.

• A DIY approach that avoids rip-off merchants and saves you a bundle in the long term.

• How to create and run a drawdown portfolio that turns your pension into a sustainable retirement income.

• Good questions to ask an advisor should you still want to hire one, which will help you find one of the good guys to work with.

To get you started we’ve a huge library of passive investing articles here on Monevator.

Been there, done that

Index investing isn’t just a nice theory for me. It’s exactly how I achieved financial independence and quit my day job early.

Okay, so now I write about investing in my spare time instead. But that should give you a clue as to how keen I am to bring this proven strategy to the most people possible.

(Well, that and it keeps me in spare bicycle parts and scones…)

Dive in – and happy investing!

The Accumulator

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What caught my eye this week.

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^{Disclosure: Some links are affiliate links, where we may earn a commission. This article is not personal financial advice. See all product terms and conditions.}

The best savings rates on cash have recovered from dreadful to tolerable in recent years, though generic accounts continue to sport rates as low as 1% AER.

(An AER of 1% is equivalent to £1 per year for every £100 saved. Don’t spend it all at once!)

Higher rates will have been welcomed by many Monevator readers. The low-interest era was especially tough on cautious savers who kept a lot of their wealth in a cash savings account – although clearly higher rates have had impacts elsewhere, too, from the bond market to mortgages.

Today the situation for savers is more nuanced. While accounts paying pitiful rates still abound, the market is much more competitive.

Indeed, account switchers – and of course enthusiasts like myself, who keep a keen eye on interest rates – can out-earn more complacent savers five times over.

Moreover, anyone with a large pot of cash to stash has had something of an unexpected reprieve in recent months. Albeit for unfortunate reasons.

Isn’t it Iranic?

The Bank of England’s Bank Rate had fallen steadily since late 2024.

But with the war in Iran, Bank Rate steadied at 3.75% and further rate cuts are at the least postponed. Interest rates could even rise.

This leaves our savings at the mercy of geopolitics. But whether this leads to more competition in the savings market or to banks nervously edging their rates downwards is hard to call.

Best savings accounts

Perhaps, then, you’re left wondering where you should stash your cash today – or you’d just like a lower-hassle solution to this issue of fluctuating rates?

Let’s look at the different types of accounts available, which ones pay the highest rates of interest, and consider some tricks to make things simpler.

Easy access savings

• Highest easy access rate if you open a current account: LHV @ 4.25% AER. Open its app-based current account and then open a savings account
• Highest easy access rate including a temporary bonus: Tembo Money Homesaver @ 4.75% AER, including a 1.75% bonus for 12 months
• Highest straightforward easy access rate: Charter Savings Bank Easy Access (Issue 73) @ 4.01% AER, open from £1

Easy access is the most popular type of savings account. Such accounts give you instant access to your cash, which means you can add or withdraw money as often as you like. But they also pay far higher interest rates than a typical current account.

Easy access is the best type of account to go for if you know you’ll need access to your cash within a year or so. They’re also the best option if you just don’t want to lock away your cash for some reason.

However there are generally higher-paying options than easy access. So if you apply a mindset of “I must have all my savings available when I want them”, it will cost you.

It’s generally better to divvy up your savings. If you want, say, £20,000 for emergencies and £15,000 is stored for a house move in two years’ time, then you don’t need all £35,000 in an easy-access account.

Note that interest rates on easy access accounts are usually variable, meaning they can change in future. However some do pay a temporary fixed bonus.

Not so easy…

Picking the ‘best’ easy access account is tricky. That’s because there are many accounts out there, all pitched slightly differently.

What’s more, the highest rates are usually only available with strings attached.

LHV is a strong contender at 4.25% AER, but having to open a current account is extra hassle.

The Charter Savings Bank offers a much simpler product at 4.01%. For every £10,000 saved, the difference with LVH’s best offering would only be £24 per year, pre-tax.

Charter Savings Bank tends to release a new issue every time the interest rate wobbles. (If you’ve wondered how it had reached 73 separate issues of the same account, that’s why!) You can get a competitive rate to start with, but your earnings might not increase if rates increase. You’re free to move to the latest issue though, with some minor hassle.

Tembo is an intriguing option. You might want to leave after 12 months when its 1.75% bonus expires, but getting 4.75% AER for a year is decent by today’s standards.

Tembo is actually advertising a 5.75% AER, since it’ll boost your rate by 1% if you use its mortgage service. The service comes with its own fees though, and you could be worse-off than if you’d used a fee-free mortgage broker.

Regular savings

• Highest regular saver rate if you open an app-based current account: Zopa @ 7.1% AER, open Zopa’s ‘Biscuit’ account and then open a regular saver
• Highest regular saver rate if you open a traditional current account: First Direct or Co-operative @ 7% AER
• Highest regular saver rate open to all: Monmouthshire Building Society @ 6% AER, open via its app

Regular savings accounts enable you to put money into them on a monthly basis. Usually their headline rates beat easy access deals, but there are limits as to how much you can save each month. These limits are often quite stingy!

Some regular savers only allow you to hold them for a year. Others restrict your ability to withdraw cash. And the highest-paying accounts are often tied to you also running an associated current account.

Personally, I wouldn’t open a regular savings account on its own unless it was trivially easy – for instance, if it could be opened via the app of a current account I’m already using.

If you need to find the best home for £20,000, then putting £250 away each month doesn’t achieve much. However I’ve previously written a guide explaining how to build a ladder and stash thousands into regular savers if you want to maximise your savings interest.

Notice savings

• Highest notice savings rate (180 days): The Stafford Building Society @ 4.26% AER
• Highest notice savings rate (90 days): OakNorth @ 4.15% AER, rate includes a 1% bonus for new customers only

Notice savings accounts are just like easy access accounts, but with an added rule that you must give your provider notice before making a withdrawal. In this way they can beat easy access rates without requiring you to lock away your cash for an excessively long period.

Generally, the longer the notice period, the higher the rate. It does depend on long-term projections in the money markets though.

Personally, I don’t use notice accounts, as I can usually beat their rates with easy access and regular saver alternatives. I’m more than happy to pop a few doors down the (figurative) high street if someone will pay me a fraction more interest. As customers go, I’m as disloyal as they come.

However the big advantage of notice accounts is they can be set-and-forget.

If you know you won’t get around to changing your bank when the market moves, then notice accounts can at least deliver a slightly higher rate than the easy access alternatives.

Again though, if you’re ready to look for the best deals, notice accounts aren’t likely to deliver.

Remember too that they’re variable accounts, so they’re not guaranteed to stay at high rates. When the Bank of England Bank Rate drops, most providers will soon issue their own rate cuts.

Fixed savings

• Highest fixed savings rate (one year): Close Brothers @ 4.65% AER, minimum £10,000 deposit
• Highest fixed savings rate (5 years): Close Brothers @ 4.67% AER, minimum £10,000 deposit
• Highest fixed savings rate (5 years, low minimum): ThisBank @ 4.57% AER, minimum £100 deposit

To secure the highest currently prevailing interest rates, fixed savings accounts are usually the way to go.

With these accounts you must lock away cash for a set period of time. In return, you typically earn a higher interest rate than most easy access alternatives – at the time you put your money away.

Fixed rates can vary significantly depending on long-term interest rate predictions. Right now, there’s little difference between a one-year and a five-year term. But things can change quickly.

Although I think fixed savings accounts have a place, I tend to steer clear. That’s because if I can manage without access to the cash for five years, then I can invest it in potentially more lucrative assets like shares.

However some people do like to keep several years of cash at the ready. And if you most value certainty then you will find it here.

With fixed rates it’s important to appreciate the ‘interest rate risk’ of opting for an account with a long fixed period: if rates rise in future, you won’t be able to benefit until your current term expires.

Reducing the hassle

Some of you will be reading this and thinking it sounds like a nightmare. Opening new accounts with different banks, posting copies of your ID, and remembering yet another app login.

All for only marginally higher rates here and there!

This is where intermediary platforms can provide an interesting alternative.

Hargreaves Lansdown is one such option. Alternatives include Prosper and Flagstone. I don’t have experience of the latter, but I have investments with the UK’s investment behemoth. Hence it was no extra hassle for me to open Hargreaves’ Active Savings Account product.

With Active Savings I can open, for instance, a Close Brothers one-year fixed account at 4.47% AER with just the push of a button.

Admittedly, that rate is 0.18% less than going to Close Brothers direct. But if the hassle factor has you languishing on a lowly rate at your bank, then an intermediary is a better alternative.

In this example, with £10,000 of savings I would earn £18 less (pre-tax) per year with Active Savings versus going direct. No big deal.

But if my money was sitting in a Barclays Everyday Saver paying just 1% AER, and I was planning to move it into a Barclays’ one-year fixed rate account at 3.7% AER – just because I wanted to avoid the hassle of switching provider – then you can see why an intermediary can be a more profitable option.

These services probably won’t get you the best rate. But they can get you a better than average one, and with only a few clicks.

Is a savings account a good idea with high inflation?

After the enormous price rises of recent years, the latest Government inflation figures tell us that Consumer Price Index inflation is running at 3%.

This is the first and biggest problem with cash. Even if you bagged some of the highest rates we’ve listed above, you’d be lucky to see more than a 1% return in real terms. ¹

So compared to other asset classes, you probably won’t win with cash in the long run.

However even the most aggressive investors should usually have some of their wealth in cash, whether for diversification or for maintaining an emergency fund. And it’s clearly worth getting the best rate you can on your money, for whatever level of hassle you can deal with.

The second problem with cash is taxes.

If you’re a higher-rate taxpayer, then only the first £500 of savings interest is tax-free. For everything above that, the 4% headline rate gets you just 2.4% after HMRC has had its cut.

Tax-free gilts may well be a better alternative for large sums of money, especially for higher earners.

How much of your portfolio do you currently keep in cash? Have you had any experience with savings intermediaries? We’d love to hear in the comments below. Note that we’ve updated this article with current rates and products, but kept the old comments for interest. Check the dates to be sure.

1. That is, after inflation.

The post Best savings account rates appeared first on Monevator.

I don’t know about you but I’ve forgotten all about the AI bubble since the Iran War started. So that’s something.

However, despite every fund we own falling back since Trump went nuts, the Slow & Steady passive portfolio has still managed to eke out a 2% gain since our last check-in three months ago.

Trump go boom-boom

Here’s what happened to the portfolio’s equity funds since the start of the year:

​​Chart from Morningstar. Nominal annualised total returns (GBP).

This chart is as good an example as you could wish for to show that attempting to predict the markets is a massive waste of time.

Everything was going great guns until bombs started dropping on 28 February. No bombs – no reason for the market to plummet.

Was Trump’s decision predictable? Fundamentally, no.

You could argue that the presence of a US carrier strike group in the Gulf meant something was up. But look at the pivotal point on the chart. If a deal had been struck before 28 February, equities would have probably continued upwards.

As it was, it was fastest fingers first on the ‘sell’ button when the market opened on 2 March.

Nobody knew which way the war-cookie was going to crumble beforehand. Apart from a lucky few who took some – ahem – ballsy flutters on the prediction markets, of course.

How did bonds do?

I’m so glad you asked! Here’s the year-to-date performance of the Slow & Steady portfolio’s much-vaunted defensive partnership:

​​Linkers = World index-linked government bonds hedged to GBP. Gilts = Nominal UK government bonds (All Stocks).

Nominal government bonds do not love an inflationary supply shock – as we saw in 2022.

Hence they’re down again, and standing by for a slump more to their liking. (Think something more along the lines of the Dotcom Bust or the Global Financial Crisis, where demand and liquidity dry up.)

More pleasantly, our index-linked bond fund looks reasonably solid.

It’s a short-term bond fund for one thing, which makes it inherently less volatile than a longer duration gilts tracker. Plus, it’s chock full of inflation-linked bonds. So you’d hope it would perform tolerably well when the consumer price index ticks up.

That said, the very same fund did not cover itself in glory in 2022. Read our individual index-linked gilt vs linker fund comparison for the gory details.

Though it took a while to reveal itself, our passive portfolio’s greatest weakness has proved to be its lack of defensive diversification. If I was starting again now, our model portfolio would include cash, gold, and commodities too.

Commodities are the one asset that is positively thriving right now.

Portfolio raw numbers time

What? You think I’ve been stalling? Well, maybe I have… Here’s the latest scores-on-the-doors, brought to you in CrisisWhatCrisis-o-vision:

The Slow & Steady is Monevator’s model passive investing portfolio. It was set up at the start of 2011 with £3,000. An extra £1,360 is invested every quarter into a diversified set of index funds, tilted towards equities. You can read the origin story and find all the previous passive portfolio posts in the Monevator vaults. Last quarter’s instalment can be found here.

All returns in this post are nominal GBP total returns unless otherwise stated. Subtract about 3% from the portfolio’s annualised performance figure to estimate the real return after inflation.

The portfolio’s overall annualised return since inception is 7.36%. Subtract average inflation over the period and the real return is about 4.5%.

That will do nicely. The average annualised real return for a 60/40 World/gilts portfolio is 4% since 1900. ¹

The story over the portfolio’s lifetime has essentially been equity returns good, bond returns bad.

Grinding out a result

It’s easy to lose sight of, but the Slow & Steady has grown from £3,000 to over £100,000 in 15 years.

That figure places the model portfolio well above the average £80,000 held in pension wealth by people in my age bracket, according to this 2025 analysis of ONS data.

What’s more, this six-figure sum was achieved with relatively modest monthly contributions (£250 a month in 2010 money) and zero pension tax relief, too. (The portfolio is assumed to be held in an ISA.)

No fancy funds or strategies were used. No leverage or market timing. No kung-fu or specialist knowledge required.

All anyone had to do was follow the rules of a straightforward passive investing strategy and keep the faith long enough for it to pay off. (That’s the hard bit.)

It works and there’s no need to over-think it.

The long-term picture

The next chart shows the portfolio’s growth trajectory, along with the various setbacks along the way:

That is one boring chart. It looks like nothing happened. The portfolio has gently wafted up, and world events failed to knock it down again for any period longer than nine months. We shrugged off the drip-feed of fear.

That said, our model portfolio is still down from its December 2021 peak in real terms (See the lighter green line). That only goes to show how pernicious inflation can be.

Fund / asset class returns

Here’s a breakdown of the portfolio’s individual fund performance, with an eye to the short and long-ish runs:

​​Data from Morningstar. Nominal total returns (GBP). 10-year figure is annualised.

The short-term view tells us that equity diversification is back in vogue. Emerging markets and UK equities beat the MSCI World – and even the S&P 500 – over the last two years.

How many people don’t even look at UK equities anymore because the British economy appears moribund and the S&P 500 has smashed all-comers for years?

Stop performance chasing, people!

Okay, that’s enough tilting at windmills for one update.

New transactions

Every quarter we throw £1,360 of red meat to the wild dogs of the market. Our stake is split between our seven funds, according to our predetermined asset allocation.

We rebalance using Larry Swedroe’s 5/25 rule. That hasn’t been activated this quarter, so the trades play out as follows:

Emerging market equities

iShares Emerging Markets Equity Index Fund D – OCF 0.19%

Fund identifier: GB00B84DY642

New purchase: £108.80

Buy 42.2377 units @ £2.58

Global property

iShares Environment & Low Carbon Tilt Real Estate Index Fund – OCF 0.17%

Fund identifier: GB00B5BFJG71

New purchase: £68

Buy 27.2076 units @ £2.50

Developed world ex-UK equities

Vanguard FTSE Developed World ex-UK Equity Index Fund – OCF 0.14%

Fund identifier: GB00B59G4Q73

New purchase: £503.20

Buy 0.6141 units @ £819.40

UK equity

Vanguard FTSE UK All-Share Index Trust – OCF 0.06%

Fund identifier: GB00B3X7QG63

New purchase: £68

Buy 0.1848 units @ £367.93

Global small cap equities

Vanguard Global Small-Cap Index Fund – OCF 0.29%

Fund identifier: IE00B3X1NT05

New purchase: £68

Buy 0.1272 units @ £534.69

UK gilts

Vanguard UK Government Bond Index – OCF 0.12%

Fund identifier: IE00B1S75374

New purchase: £285.60

Buy 2.1073 units @ £135.53

Global inflation-linked bonds

Royal London Short Duration Global Index-Linked Fund – OCF 0.27%

Fund identifier: GB00BD050F05

New purchase: £258.40

Buy 234.2702 units @ £1.103

New investment contribution = £1,360

Trading cost = £0

Average portfolio OCF = 0.17%

User manual

^{Disclosure: Links to platforms may be affiliate links, where we may earn a commission. This article is not personal financial advice. When investing, your capital is at risk and you may get back less than invested. With commission-free brokers other fees may apply. See terms and fees. Past performance doesn’t guarantee future results.}

Take a look at our broker comparison table for your best investment account options.

Or learn more about choosing the cheapest stocks and shares ISA for your situation.

If this seems too complicated, check out our best multi-asset fund picks. These include all-in-one diversified portfolios such as the Vanguard LifeStrategy funds.

You might also enjoy a refresher on why we think most people are best choosing passive vs active investing.

Take it steady,

The Accumulator

1. Jan 1900 to Dec 2025 real total returns in GBP.

The post The Slow and Steady passive portfolio update: Q1 2026 appeared first on Monevator.

What caught my eye this week.

The post Weekend reading: Hubris on hold appeared first on Monevator.

I have written a few times in recent years urging Monevator readers not to give up on gilts. (That is, UK government bonds.)

That wasn’t because I’m a diehard gilt groupie. On the contrary, for most of my investing life my allocation to bonds has hovered closer to the flatline than investing orthodoxy would think wise.

However even as rootin’, tootin’, stock-lovin’ active investor I could see that many passive investors were throwing the bond baby out with the bond bear market bathwater.

Who could blame them after the post-Covid, post-Liz Truss bond rout?

As interest rates rose with inflation coming back from the dead, grossly-overpriced bonds crashed. The result was one of the worst stints for UK investors in government bonds of all-time.

Here’s how the iShares core UK 10-year government bond fund swan-dived into the Liz Truss lows of 2022:

Source: Fiscal AI

You don’t need to be Warren Buffett to guess what seeing ‘safe’ assets plunge like this did for investor appetite.

“Be greedy when others are writhing on the floor, breathless, and calling for mummy”, anyone?

No thanks, said many shell-shocked would-be bond buyers.

Once more unto the breach

However, if investors did make a mistake in trusting the market’s wisdom before the bond crash, it was by buying bonds on negative yields that could only deliver a negative return in the long run.

Yet following the bond rout that troughed in 2022, yields-to-maturity were positive across the curve.

At least in nominal terms, gilts were now priced to actually reward investors for holding them.

So it seemed to me some investors were closing the door on gilts after the horse had bolted, run into a ditch, and been winched out looking beaten-up, sure, but ready to run again.

Note: I wasn’t suggesting UK government bonds were a surefire winner. Nor that they’d give Bitcoin or the Magnificent Seven mega caps a run for their money.

It was just that with yields restored to something closer to normal, I felt they could be added to portfolios once more without all that existential negative yield drama.

Gilt trips

So how have gilts performed since those dark days of 2022, when Britain pondered whether a lettuce would do a better job of steering the ship of state?

Well, if you’d muttered “jog on Investor” on reading my articles and kept on shunning gilts, you’d be happy enough. That’s even if you’d parked your money in cash or money-market funds – let alone bought more equities instead.

Because gilts have meandered around doing nothing much since. Indeed with hostilities in Iran, the resultant inflation scare saw the 10-year gilt yield break briefly above 5%, before it fell back on news of a tentative ceasefire:

Source: CNBC

Remember, yields move inversely to price with bonds. All things equal, higher yields on gilts reflects lower prices for existing gilts in the market.

Cor Blighty

As an aside, it’s worth noting that Britain is still considered something of a basket case by international investors.

As CNBC reported towards the end of March:

One of the most alarming aspects of the sell-off in risk assets after the attacks on Iran, from a British perspective, has been how gilts – U.K. government IOUs – fell more sharply than bonds issued by any other G7 economy.

Take the 10-year gilt, the most liquid and most widely-traded of all gilt maturities and the best proxy for the U.K. government’s long-term borrowing costs.

At one point […] the yield hit 5.115% – a level not seen since the global financial crisis in April 2008.

These moves were much sharper than for other G7 countries. Indeed among similar economies only Australia has a higher 10-year yield.

The CNBC author covered the reasons why:

One is that the Bank of England’s policy rate was already the highest of any G7 central bank and Britain’s rate of inflation is higher than that of its peers.

A second is that interest rate expectations for the U.K. have changed more dramatically than any other G7 economy. Before the conflict, the Bank was expected to cut its main policy rate this month – sparking a sharper reaction in gilts.

A third is that, Japan aside, no G7 economy depends more on imported gas – the price of which has surged.

Fourthly, investors dislike U.K. politics. The surge in energy prices has raised fears of higher spending – funded by growth-destroying tax increases or more borrowing – to support households. They also fear that May’s local elections, should the governing Labour Party perform poorly, will result in a leadership challenge to Prime Minister Keir Starmer and his possible replacement by a more left-wing rival.

But demanding a premium to hold gilts is not new. It was reinforced to the British public most starkly in recent times when, in September 2022, gilts sold off violently after Liz Truss’ government unveiled a mini-Budget including £45 billion worth of unfunded tax cuts.

Market participants spoke of investors demanding a ‘moron premium’ to hold gilts over bonds of equivalent duration issued by peers.

As I’ve pointed out many times in our debates about Brexit, Britain is a relatively small nation that relies on trade for its economic health and ‘the kindness of strangers’ to shore up its finances. It’s been prone to higher inflation than the continent for generations. In leaving the trading bloc we’ve increased those vulnerabilities.

Add in an energy shock and an anti-climactic regime change in Downing Street and there’s still very little for global bond investors to get excited about.

Greater expectations from gilts

So far, so soggy then for gilts.

However there’s still that silver lining to higher bond yields. Namely higher expected returns.

As we pointed out back in 2022:

Rising bond yields are positive for long-term investors who can ride out the capital losses and eventually take advantage of fatter income payments.

Much of the doom and gloom after the Financial Crisis concerned the fact that low yields meant miserly long-term bond returns. It dragged down the equity risk premium as well.

Now, rising rates and a return to the old normal is leaving that particular threat in the rear-view mirror.

Higher coupons should lower bond volatility. They plump up your safety cushion against equity losses, too.

For sure as our article pointed there was a risk that yields would continue to rise.

Inflation will always be a threat to conventional bonds, too.

But the main point was that investors reeling from nominal losses of 30% or more in their gilt allocations were very unlikely to suffer that again from the 2022 starting point. An unusually extreme situation had unwound.

And sure enough, we haven’t seen a repeat of that carnage. While gilt returns have been the definition of ‘meh’ since then, they’ve not blown up any portfolios.

Rather, here’s how owning that iShares 10-year gilt fund (ticker: IGLT) and reinvesting the coupon has performed since the end of 2022:

Source: Fiscal AI

Okay, nobody is posting rocket ship emojis on the back of a 3.4% total return. But it is positive.

What about long duration index-linked bonds? How have they done since I pondered a potential opportunity in index-linked gilts in summer 2023?

Well here’s the total return of IGLT’s index-linked sister fund from iShares (ticker: INXG):

Source: Fiscal AI

That return is negative, which is disappointing – but it’s not negative by much.

Also the opportunity my article was flagging (early) was the emerging chance to buy a positive-returning index-linked ladder at last.

Still, I can’t deny I thought INXG might bounce back a bit more quickly than this.

Short thrift

On the other hand – and especially in his articles since 2022 – The Accumulator has repeatedly suggested that nervous would-be gilt investors should shorten their bond allocation’s duration.

That is, that they should plump for shorter-term bonds (or bond funds) that are less susceptible to interest rate risk.

So here’s how Amundi’s 0-5 year gilt fund (ticker: GIL5) has done since the 2022 annus horribilis:

Source: Fiscal AI

That’s more like what most people want from their bonds!

If we could guarantee even modest ‘up and to the right’ returns from gilts then we’d all be up for owning them. (Spoiler alert: we can’t guarantee that.)

Long odds

At the other end of the spectrum, those ultra long-term gilts like the cultish Treasury 2061 (ticker: TG61) we looked at last summer did rally, but they’ve more recently spluttered out with the war and inflation fears.

For the record, as I type you can lock-in a yield-to-redemption of 5.3% on TG61.

My friend who I quoted in that 2025 article owns his allocation of ultra-long gilts for tail-risk depression insurance. And where else can you get insurance that pays you a decent income while you wait?

It’s sure to have its moment in the sun some day… isn’t it?

Gilts: complex

What you think this wander through the recent returns from gilts proves perhaps depends on what you thought back in 2022. There’s a bit of something for everyone.

I’d hope though that if you honestly expected the intense bond pain to continue, then you at least now take the point about a one-off reset from negative yields, and also how higher yields are good for future returns.

More generally, let’s filch a graphic from The Accumulator. Here’s a quick reminder for why most investors would want to own some government bonds:

You’ll notice ‘stonking gainz’ is absent from TA’s summary.

Most investors aged over 30 or so are advised to own some bonds (or similar lower-risk stuff such as cash) because going all-in on the likely best-performing asset – equities – may be too risky and volatile.

And now gilt yields are normal again, their role as a potential portfolio stabiliser has been restored, too.

Indeed, turn your eyes from the stock market bull run and gilts arguably look quite attractive. The likes of Vanguard expect 10-year gilt returns of around 5-6% a year over the next decade.

This isn’t a bold prediction. The starting yield (to redemption) of gilts is a great guide to your expected returns. Remember, 10-year gilts are already yielding close to 5%.

Goldilocks gilts

Of course we all learned some lessons from 2022.

I’d still contend that Monevator was relatively cautious about gilt returns for a passive-focussed site in the near-zero years before the crash, as a search of our archives will attest. (This prescient warning by The Accumulator from 2016 about negative-yielding index-linked gilts is a case in point).

However it’s fair to say we took our lumps, too.

Our house view now is that prudent diversification should also consider holdings of cash, gold, and potentially commodities. As well as even more careful thinking about bond duration, and perhaps making use of gilt ladders if pure inflation hedging and/or a sequence of real cashflow returns is all-important to you (such as if you’re in retirement and drawing an income).

It’s also true that if governments eventually try to inflate away their ballooning national debts, then the returns from conventional gilts could yet be very poor in real terms.

On the other hand, perhaps they won’t or can’t. And there’s always index-linked gilts to own, too.

Remember all investment choices involve trade-offs. Nothing is 100% ‘safe’ and risk cannot be created or destroyed – only swapped for other kinds of risk.

In particular, if you believe there’s no downside to holding cash or MMFs instead of, say, intermediate-duration gilts, then The Accumulator has shown that historically it would have cost you via lower returns.

Finally, it’s been ages since we had a prolonged bear market for shares. The notion that you had to make the case for an allocation to fixed income will look very strange in such times, if history is any guide.

The post Gilts: hoping for the best, experiencing not the worst appeared first on Monevator.

A Monevator reader wrote, “I’m 100% invested in equities. I’m 56 and still think there’s time to accumulate and weather the roller coaster of global markets. Am I being foolish?”

I thought this was a brave and important question to ask. The query comes up a fair bit and speaks to a dilemma that many of us face.

The post Is 100% equities worth the risk? appeared first on Monevator.

Please see the end for a note on the future of Weekend Reading.

Living in an investing and financial independence bubble – researching both all week, talking to FIRE-d contributors and readers, and occasionally wondering if I should take down the shingle on the Monevator door to go travelling myself – means some things that shouldn’t shock me still do.

How little most people save, for example. Or what a typical office worker pays for lunch.

This week’s eye-opener was a graph from Which:

I know most people have pocket-sized private pension pots. And also that the Monevator readership is unusual – by being substantially better off, or by being younger but on track to get that way.

I also know defined benefit pensions (the purple chunk in the graphic) are a huge deal for the current generation of pensioners – it’s just there’s not much we can usefully say about them and I’ve never been within a maritime exclusion zone of getting one, so they don’t feature much on Monevator.

I was still struck though by how small a contribution private pension savings (the mustard-coloured block in the graphic) and investments (in green) make to pensioner incomes.

Because those mustardy and green bars are our bread and butter on Monevator.

From our hundreds of articles on making such pots bigger to our growing coverage on how to spend them down, we’re focused on a strategy that barely registers in the typical retiree’s life.

Stately progress

Of course this should change a bit. Defined (occupational) pensions have all but vanished from the private sector. Millions of workers are now growing investment pots that will comprise a big chunk of their retirement incomes in 20 to 30 years.

But the sobering fact is for most Britons, the State Pension is and will remain all-important in retirement.

From the Which article:

The DWP’s figures highlight how vital the state pension is.

Almost all pensioners (98%) receive it, and benefits overall make up a large share of income – 58% for single pensioners and 40% for couples.

The state pension is a particularly important source of income for those in low-income households. For the lowest-income pensioners, benefits make up the majority of their income – 79% for couples and 88% for single pensioners.

By contrast, for the highest-income groups, this falls to 17% and 29%.

This is exactly why we don’t think the State Pension will ever be scrapped, incidentally.

Weekend Reading over email

Nothing good lasts forever. Just consider my long-lost six-pack. Or, indeed, my ability to get through a six-pack on a weeknight. ¹

Well, that great random number generator of change has come for Weekend Reading.

From next week onwards, only the first Weekend Reading of the month will be visible to non-members on the Monevator website.

Logged-in Mavens and Moguls members will be able to browse it on-site as normal, like the special people they are. Mavens membership only costs a couple of pizzas a year, so perhaps this is your prompt to sign up? Thanks in advance!

If you’d rather not join for some reason, then for now and for the foreseeable I’ll also continue to send Weekend Reading to all email subscribers. Whether free email subscribers or members.

Everyone will also be able to comment below the article, even if they can’t read the article on the site.

• Simply subscribe via email to keep getting this weekly dose of investing links.

A majority of regular readers now get Monevator over email anyway. But I appreciate this shift will inconvenience a few of you – particularly non-members who like to use RSS.

Please know I’m not motivated by making the world a little worse for you.

A traffic jam

Most of you probably aren’t very interested in the decline and fall of the open Internet, I realise.

You can still find free articles to read, and using ChatGPT is fun.

I’m much the same myself. However the fact is this shift is destroying the viability of independent websites.

The big tech sites have seen their traffic fall by around 60%, for instance. US personal finance site NerdWallet has seen its traffic decline by 73%! We’ve seen our traffic scythed away, too.

If these traffic drops were because people no longer wanted guidance about buying their next TV or which credit card to get, then fair enough.

But that’s not the case.

People do still want and need information. However it’s the big AI tech companies that are giving it to them. And their AI models were trained on and still consult these very websites!

Instead of sending the original creators their readers though – and so affording them a viable business model – the AI companies capture 99% of the attention and most of the value for themselves.

Cue a devastated online media landscape.

I’ve been warning this would happen for years. Read this fresh article by Anil Dash if it’s all new to you.

Monevator lives on only because of our generous members’ support. Moving Weekend Reading to email probably won’t directly boost membership much, but it helps us be more in control of our destiny.

Beyond that, I’ve been sending hundreds of thousands of clicks out annually across the web freely for nearly 20 years with these roundups. Often to the same stable of websites. But for years now almost nobody links back. And link lists don’t do our search rankings much good either, for what little that’s worth these days.

So evolve we must. Let’s see how it goes.

• Become a member and nothing changes. Or sign up on email – for free – and read the links there.

Have a great long weekend!

From Monevator

How to choose the best global tracker fund – Monevator

Have a plan well ahead of remortgaging – Monevator

From the archive-ator: Do not sell [Six years ago…!] – Monevator

News

UK food inflation could hit 9%, trade body warns – Guardian

All the price hikes coming in April – Be Clever With Your Cash

FCA confirms motor finance redress scheme – FCA

House prices up 2.2% in March, but outlook uncertain says Nationwide – Mortgage Solutions

Why younger retirees are earning more from their pensions – Yahoo Finance

Half of UK households struggle to cover cost of essentials – LBC

Four ways Trump’s year-old tariffs have changed the global economy – BBC

Ranked: the fastest-growing major economies [Infographic] – Visual Capitalist

Super-rich may have hidden $3.55tn from tax officials, says Oxfam – Guardian

Waymo is doing more than 500,000 paid robotaxi rides every week – Sherwood

Products and services

^{Disclosure: Links to platforms may be affiliate links, where we may earn a commission. This article is not personal financial advice. When investing, your capital is at risk and you may get back less than invested. With commission-free brokers other fees may apply. See terms and fees. Past performance doesn’t guarantee future results.}

What happens if you overpay into an ISA? – Be Clever With Your Cash

Monzo and Revolut take banking battle to the playground – City AM

Get up to £1,500 cashback when you transfer your cash and/or investments to Charles Stanley Direct through this affiliate link. Terms apply – Charles Stanley

Best bank account switching deals in April – Which

Can you get a mortgage on a low income? – Be Clever With Your Cash

Get up to £3,000 cashback when you open or switch to an Interactive Investor SIPP. Terms and fees apply, affiliate link – Interactive Investor

This Premium Bonds alternative offers a £250,000 jackpot – This Is Money

Traditional farmhouses for sale, in pictures – Guardian

Comment and opinion

Has the world become more uncertain for investors? – Behavioural Investment

New rules could affect your State Pension if you live abroad – Which

Chekhov’s gun – Fortunes & Frictions

What the 4% rule creator thinks today [Podcast] – White Coat Investor

How to own the best stocks – A Wealth of Common Sense

Does it really make sense to retrain as a plumber? [Paywall] – FT

Ode to a 2009 Honda Accord – The Belle Curve

When your dreams outrun your dollars – The Net Worthwhile Weekly

Simple living in Suffolk again – Simple Living in Suffolk

What’s the value of one day? – The Root of All

Naughty corner: Active antics

Is the US housing market starting to crash? – Of Dollars and Data

Strategy is entering its desperate stretch [Paywall] – FT

Alpha out of extreme portfolio construction – Morningstar

Kindle book bargains

Million Dollar Weekend by Noah Kagan – £0.99 on Kindle

The Moneyless Man by Mark Boyle – £0.99 on Kindle

Red Roulette: Inside China by Desmond Shum – £0.99 on Kindle

The Panama Papers by Frederick Obermaier and Bastian Obermayer  – £0.99 on Kindle

Or pick up one of the all-time great investing classics – Monevator shop

Environmental factors

The UK’s most successful growth industry: organised waste crime – Guardian

The ins and outs of plug-in solar panels – This Is Money

More than 1.3 million tonnes of fish taken from UK protected waters – Greenpeace

The green utopia in Colombia that tried to reinvent the world – BBC

Trump move threatens endangered species in the Gulf of Mexico – Guardian

Robot overlord roundup

How one man used AI to design a cancer drug for his dog – via Instagram

OpenAI is now valued at $852bn. That’s about five Disneys – Sherwood

AI is pushing up the price of computer gaming – Guardian

Claude’s popularity with paying customers is skyrocketing – TechCrunch

Meta’s sunglasses left this reviewer feeling like a creep – Guardian

Data on AI use from surveying 6,000 company execs [Research] – SSRN

Tech and war mini-special

The human cost of compressing the ‘kill chain’ – Guardian

Is it 1914 in America? – New York Times

Loaded dice will blow up in our faces – Spencer Jakab

Not at the dinner table

Brexit and bad vibes – Brexit and Brexitism

In Hungary, the first post-reality political campaign – The Atlantic

The Ozempicization of the economy – Kyla Scanlon

Basic Income’s roots in 18th Century England – The Conversation

The facts show immigration doesn’t cause crime. People just don’t believe it – MSN

Moscow is benefiting from the Iran war, for now – CNBC

A repudiation of US values – Abnormal Returns

Donald Trump’s badly-timed Iran war narrative – Drezner’s World

Off our beat

The horrors that could lie ahead if vaccines vanish – Pro Publica

Child’s play – Harper’s

Seeing like a spreadsheet – David Oks

Why are UK energy costs so high? [Podcast] – Chatham House

How the war in Iran hits farmers in California – L.A. Times via MSN

Why Florence started the Renaissance – Uncharted Territories

The centuries-old origins of current fairy fiction – BBC

Making peace with your inner critic – Abnormal Returns

Remote work can blunt the fertility decline – CEPR

Incentives matter: Nazi edition – Klement on Investing

Long odds and unseen differences – Seth Godin

And finally…

“The rich ruleth over the poor, and the borrower is servant to the lender.”
– Proverbs, King James Bible

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1. Note: that’s just a rhetorical flourish. I’m barely poisoning myself with more than a couple of units a week these days.

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Apparently hundreds of thousands of Brits don’t ever switch their mortgage. This is despite the fact that staying on an old deal instead of remortgaging promptly can be horribly expensive.

And I don’t mean ‘splurging on a fancy lunch’ expensive, either. More like ‘buying a brand new VW Golf and driving it straight into the sea’ expensive. Even delaying remortgaging by just a couple of months could cost you the same as a family holiday.

As a Monevator reader, you presumably don’t enjoy setting tenners on fire!

Interest rates can change very rapidly. 2026 began with mortgage rates creeping down, and so any delay in remortgaging didn’t matter much.

However in the past month or so, ‘politics’ has caused mortgage rates to spike. The difference in interest payable between someone who locked in a mortgage rate early and someone who is just getting around to it could be pretty chunky.

So what’s to be done?

Planning ahead to find a good new deal before your old mortgage expires is obviously ideal. But even if the end of your deal is fast approaching – or it’s passed already – you can still take some of the sting out of recent rate rises.

How mortgages catch people out

In some countries, all mortgages are fixed products. You take out a 30-year mortgage at a 5% interest rate, and if you do nothing else then you pay that 5% interest for 30 years.

Job done.

But in the UK? Not so. Though fintech start-ups occasionally tout fixed-for-life mortgages as the future, the idea still hasn’t caught on.

Instead, many of us buy mortgages the same way we get our broadband. We find a good deal for the first few years, and then when we’ve stopped paying attention our charges are whacked up.

Sure, a bank will reel you in with an attractive 3.5% fixed rate. But that rate won’t last more than a few years before it shoves you on to what they call the Standard Variable Rate (SVR).

Which perhaps we should rename the SVR the ‘Seriously Villainous Rate’ – because despite the Bank of England’s Bank Rate being just 3.75% as I type, the SVR at some lenders exceeds 8%!

Now, that SVR will rise and fall with Bank Rate. So even on an SVR you might see your repayments fall.

You might also ask: do a few percentage points really matter in the grand scheme of things, anyway?

Well, yes, when you’re borrowing hundreds of thousands of pounds. Small differences add up.

The cost of higher rates can be colossal

Let’s meet Bill.

Bill is a smart guy. He gets his favourite craft beer delivered. It’s cheaper and better that way than the pub. Bill also loves trading stocks on his phone. He thinks he’s pretty savvy.

But Bill spends all day in meetings and on calls, so he doesn’t really want to deal with more admin when he gets home. He’s not sure where ‘sort out the mortgage’ comes on his To Do list – but it’s definitely below ‘veg out on the sofa with an Uber Eats and Young Sherlock.’

Back when he bought his house, Bill borrowed £750,000 over 25 years on a two-year fixed rate deal. (Yes it’s a lot of money. Bill works in London and he likes a garden. It’s expensive out there.)

• For the first two years, at 3.5% interest, Bill repaid £3,755 per month.

But recently, Bill has seen a couple of emails from his bank that hasn’t got round to reading…

…and wham, bam, now he’s paying 8% as his fixed rate deal expires and he drops onto the bank’s SVR.

• Bill’s bank will draw £5,789 from his account next month. And he’ll continue to pay £2,034 extra every single month on his mortgage until he sorts it out.

That’s enough to buy a new car over a full year. And this is just to service the higher interest cost, remember – Bill is not paying off his mortgage any faster.

Delaying remortgaging by just a few months is bad enough

We can all see how this should go.

You’re switched on about your mortgage options. So six months before your cheap rate expires, you’re already looking out for deals. Perhaps you’ve got a mortgage broker on the case, too.

The result: everything is sorted ahead before the deadline, and neatly tied with a bow.

But what if that doesn’t happen? Or if life took over for a while, and you find yourself in Bill’s situation?

Perhaps you’ve been dealing with a sick relative, or trying to dig your way out of some nightmare at work? You know the mortgage needs to be sorted. But you’ll get to it when you’re ready.

Most people would think that’s a reasonable decision during a stressful time.

But let’s go back to Bill’s £750,000 mortgage and look at a few potential increases when on an SVR:

Even when you start on a higher initial rate of 4.5%, that SVR hike still stings.

It’s the definition of paying money for nothing.

Switched on

I understand why most ‘switch to save money’ messages get drowned out amid the noise of daily life.

Even I’m not very motivated to pocket an extra 20p by switching to a different brand of baked beans.

But given that being just a month late with your mortgage switch could cost you a four-figure sum, I’d say this is one opportunity to keep track of.

Wealth warning Mortgages are big and complex and mistakes can involve life-changing sums of money. Seek professional advice if you need it. For instance from an FCA-regulated mortgage broker. Some brokers may charge a fee, but others will not charge you and instead get a commission from the lender.

Why doesn’t everybody switch?

If it’s such a no-brainer to switch, then why do hundreds of thousands of people routinely pay the SVR?

Perhaps some customers just don’t know any better. They haven’t realised they can switch to another lender. After all, they took out a 25-year mortgage, and their bank probably won’t fall over itself to tell them how to reduce their interest payments.

For other people, remortgaging is just on the back burner. Something to deal with when life is quieter.

Maybe people believe that they owe so little that there’s no point in remortgaging? That’s a personal decision, but it’s worth knowing that various lenders do offer mortgages for very small sums. Barclays and TSB, for example, offer mortgages for as little as £5,000.

People might also have seen their financial situation change for the worse. For example, they lose their job. It could be impossible to move to a new lender.

Even so, in the vast majority of cases, people can still remortgage onto a new deal with their existing lender. ¹

In all these cases, it can’t hurt to ask a broker what your options are to get you off the SVR and onto a more competitive deal.

Remortgaging takes time

If you’re switching to a new lender, there is legal paperwork that takes its sweet time to resolve.

For starters the new lender probably wants to make sure that the house they’re lending against actually has four walls and a door. Perhaps they also want to verify you have an income to pay them back.

They’ll also want to get their name recorded with the Land Registry so you can’t sell the house and flee to the airport with a suitcase full of cash.

So it can take several weeks to switch mortgages. Even if you’re fairly on top of things, you might end up on the SVR for a period.

I once spent a month on the SVR simply because the solicitors took so long to process the paperwork.

Thankfully – after a fairly stuffy email to their complaints department – the solicitors coughed back up the additional interest I’d incurred. But it was hardly ideal.

If you do want to play the field with different lenders, get the ball rolling early on. Six months before your deal expires is recommended. That gives you three months or so for the legal gremlins to sort themselves out after you’ve made your decision.

If you haven’t got that much time

What if you’ve already found yourself on a SVR? Or you will be on one in a few weeks’ time?

Trying to tie down the best possible deal from a range of lenders could see you paying bucketloads of interest on that higher SVR whilst you wait for the cogs to slowly turn.

Instead the quickest solution, generally, is to swap to a new deal with your existing lender, typically via what is known as a ‘product transfer’.

Your current bank won’t need mountains of new legal paperwork. They validated your financials when they first offered you a mortgage.

According to an expert writing recently in the Financial Times:

…the product transfer [has] come into its own since the pandemic.

In 2006, when there was a far smaller proportion of fixed-term deals, there were 1.14mn remortgages. Last year, there were 320,000 remortgages – and over 1.54mn product transfers.

Rather than borrowers being left to drop on to typically much higher revert-to rates or arranging a remortgage, they are now incentivised to transfer to a new fixed rate with their existing lender.

The main benefit is that you don’t need to pass any additional affordability tests – which can be tricky, given the higher interest rates, and the fact that high house prices and stricter lending criteria mean buyers’ finances are typically stretched to begin with.

The downside? It might not be the cheapest mortgage offer you could get.

Another option is to again quickly switch to a new mortgage with your existing provider, but then to start that longer process of looking at other lenders.

Your current lender probably won’t appreciate you setting up a mortgage that you’ll ditch in a few months, but hey ho. That’s their problem, not yours.

Although…you’ll need to be wary of Early Repayment Charges (ERCs).

The too-early bird gets a worm

ERCs are used by banks to stop their customers playing both sides.

If you could take out a fixed rate mortgage, see rates drop, and then switch to a lower rate elsewhere, your original lender wouldn’t make the profit it anticipated when it originally offered you a mortgage.

So on some products (especially fixed rates) you’ll incur percentage-based charges for paying off the mortgage early. However there are plenty of mortgage deals around that don’t come with such penalties.

If you switch from your SVR to a cheaper product with no ERC, then you’ve dealt with the sky-high SVR. Now you can scour the market for the very cheapest deal at your leisure.

And when the time comes to move to your new lender, your ‘No ERC’ mortgage can be settled without incurring thousands in penalty charges.

Don’t let product fees stop you

You might now be thinking, “but a new deal will come with a £999 product fee!”

And sure, some do.

But using this as a reason to delay switching might not make much financial sense. You could be incurring thousands of pounds in extra interest just to avoid a £999 fee.

What’s more, there are plenty of mortgages out there with no or negligible upfront fees. The trade-off typically being a higher mortgage rate.

In some cases, such no-fee deals are your best option – especially if you’re only planning to pay that higher rate for a few months.

Brokers can advise you on all of these scenarios and figure out which will ultimately be cheapest. Though if you are thinking of making two switches, it’s worth mentioning this to them from the get-go.

Remortgaging when you have plenty of time

There are some considerations for people with more time to think about, too. For one thing, the government’s Mortgage Charter remains active – for the 49 lenders that signed up to it, anyway.

(What do you mean you never heard of the mortgage charter?)

For our purposes when remortgaging, one important aspect of the charter is it says customers can lock-in a new deal up to six months before their fixed rate deal ends.

Until very recently, mortgage rates were gradually easing down. Hence this flexibility wasn’t really a big deal. But now, with mortgage rates flying up, securing a ‘good for now’ rate ASAP has become another key weapon in your money-saving arsenal.

If the market moves in the following months and a better deal becomes available, you can swap to that better deal. Hence this way you’re protected against rates rising in the final three to six months of your deal’s term, but you’ve got a backstop to avoid landing on the SVR if something changes in the meantime.

With lots of time to spare you can also consider whether you want to work directly with a lender’s advisers, or go with an independent broker.

Personally – after a two-hour grilling from a building society about when I might be replacing my sofa and endless questions about obscure items on payslips – I’d pick the broker every time.

At least when my broker rants about how idiotic the underwriters at my bank are, he’s the one that spent hours bashing his head against the wall, not me.

A remortgaging checklist

Given that being a couple of months late to remortgaging might cost more than your summer holiday, I think it’s fair to suggest we should all plan ahead.

Here’s the steps to take:

1. Check the expiry date of your mortgage’s initial rate. Put it in the calendar or write it on the kitchen wall.
2. Don’t wait for your lender to nudge you. Get the ball rolling six months ahead of the expiry date.
3. Approach your lender or a broker. See what deals you can lock in now, and check any penalties for cancelling.
4. Remember to re-check. Make sure there isn’t a better deal out there as the switch date approaches.
5. If you’re particularly keen, continue to recheck every few months or annually. Consider any fees you’d pay for settling the mortgage early – those ERC penalties – if better rates emerge.

And if you’re reading this on an SVR, then don’t delay getting onto a new deal. Get on your phone and start making calls! I’m sure your bank will keep making money without your help.

1. There are a number of people known as ‘mortgage prisoners’ who cannot switch. This is often because their mortgages are owned by firms that don’t offer new mortgage products. MoneySavingExpert has lots more on this.

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