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As the UK economy continues to dive bomb towards recession the Bank of England has given its most blatant indication to date that interest rates will fall again in January. The indication was that...
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Wednesday 26th September 2007
Nervous savers who are worrying about the safety of their money after the Northern Rock crisis should think about spreading their money across different accounts, Fidelity International has suggested.
Currently, government legislation guarantees that in the event of the collapse of a bank, 100 per cent of savings of up to £2,000 but only 90 per cent of those worth £31,000 will be refunded - leaving many concerned about the security of their money.
Saving in blocks of £2,000 is unrealistic for those with larger amounts of cash and also means losing out on interest, so Fidelity International, manager of the UK's largest and most popular cash fund, is asking investors to consider putting some of their money into a money market fund.
Money market funds offer similar security and rates of return as cash deposits and also protect savers against the risk of a single bank collapse or default, by spreading their money across a range of financial institutions.
Richard Wastcoat, UK managing director of Fidelity International, said: "Savers who opt for a money market fund have effectively hired an expert investor to seek out constantly the best interest rates in the market on their behalf. And what you see is what you get: there are no introductory rates and no lock-ins.
"Money market funds should also appeal to those savers who have been unsettled by the credit crunch.
"These funds spread a saver's money across highly liquid cash-like securities issued by a wide range of financial institutions and top companies and so provide some protection from the collapse or closure of a single financial house."
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