Experts Provide Their Guide to Laddering as Searches For “How To Maximise Savings” Have Increased 263%

 

In the ever-evolving financial landscape, it becomes imperative to ask, “Is your money truly working for you?” Financial planning isn’t just about envisioning a distant future; it’s about crafting strategies tailored to meet immediate needs while also safeguarding and growing wealth over time.  

Given the current high-interest rate environment, cash savings should not be overlooked. Several savings account options are ripe for consideration, with fixed-term deposits emerging as a favourable choice for many, especially given their attractive interest rates. Arbuthnot Latham have provided their expert guide to maximising your savings.  

 

A Brief Dive into Fixed-Term Deposits 

 

Fixed-term deposits promise an agreed rate of interest over a defined period, thus offering clarity on the expected returns by the term’s end. However, these deposits generally tie up your funds until maturity. 

A strategy that’s gaining traction for those wanting more flexibility while capitalising on fixed-term deposits is ‘laddering’. 

Searches for “laddering” have increased 102%!

 

Unravelling Laddering 

 

Simply put, laddering is the act of dividing your investment across various fixed-term deposits with different maturity dates and interest rates. This strategy ensures a steady flow of maturing funds, allowing for reinvestment opportunities and access to cash. 

For instance, with an investment pot of £50,000, instead of locking it into one long-term deposit, one might distribute it across five fixed-term deposits of £10,000 each, ranging from 3-month to 2-year terms. As each deposit matures, the investor has the freedom to withdraw or reinvest the funds based on current needs and prevailing rates. 

 

Why Consider Laddering Fixed-Term Deposits? 

 

  • Diversification: Shield your investments from the brunt of interest rate fluctuations. 

  • Regular Liquidity: With staggered maturities, you’ll have periodic access to your funds. 

  • Potential for Higher Returns: As shorter-term deposits mature, reinvesting them might yield higher returns, especially in a rising rate environment. 

  • Flexibility: Adjust your financial tactics with changing interest rate trends and financial objectives. 

  • Tax Efficiency: Manage potential tax liabilities more proficiently with staggered maturities. 

 

 

 

Expert Tips for Maximising Savings with Laddering: 

 

  • Stay Informed: Regularly monitor interest rate trends to make informed decisions about reinvesting matured deposits. 

  • Diversify Maturities: Avoid clustering maturities too closely. Spreading them out offers more frequent liquidity. 

  • Reassess Financial Goals: As life changes, so do financial needs. Periodically evaluate your goals to ensure alignment with your laddering strategy. 

 

  • Maintain a Safety Net: Always ensure you have an emergency fund outside your laddered deposits for unexpected needs. 

  • Seek Expert Advice: Consider consulting with a financial advisor to tailor a laddering strategy best suited to your circumstances. 

 

 

Ashley King, Head of Treasury, Arbuthnot Latham commented: 

Over the last year we’ve seen clients benefit from using a laddering approach, especially when extending deposits out to two years. As we reach a perceived peak in the interest rate cycle, at levels not seen for over 15 years, a laddering strategy for deposits should continue to be attractive for the next couple of years, before interest rate cuts start to materialise. These are presently forecast in 2025.  

 



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