Savings: Where should I put my money?

Savings: Where should I put my money?
Savers have had a rough time of late, but they really shouldn't despair.

By Harry Wallop, Consumer Affairs Editor Last Updated: 7:50PM GMT 05 Feb 2009

Yes, savings rates are the lowest since the 17th Century. But that doesn't mean you should not lock your hard-earned money into iron chests and place into your cellar, as Samuel Pepys did during the Great Fire of London.
For starters there is the stock market. Yes, really. Unless you genuinely believe capitalism is dead, the stock market should be considered. It has consistently outperformed every other asset class, including property during the last century.
Only last week, I topped up the Wallop children's child trust funds – confident that when they are allowed to touch the money, it will be worth a great deal more than if I put the money into Premium Bonds.
Shares are likely to tread water for the next year or two, but in the intervening period most companies should pay out a dividend to their shareholders.
BP, for instance, intends to pay a dividend of £7.70 for every £100 invested. Okay, it is conceivable in these unprecedented times that this oil giant will cut payments to shareholders, but it seems a risk worth taking.
If you don't have the luxury of time – a prerequisite for investing in shares – there are other options.
Most savings accounts pay out less than 1.5 per cent, but there are banks desperate for your money and prepared to offer unprofitable (for them) rates if you scout around.
Standard Life Bank's Easy Access ISA has a rate of 3.5 per cent – a remarkable rate of return, considering Bank rates have hit just 1 per cent.
Or you can always turn to the last refuge of the desperate: gold, which is proving an impressive, if volatile, performer during the financial crisis.
Either buy the stuff via gold exchange traded funds, which trade on the stock market, or pop down to a bullion dealer and buy a bar of the hard stuff.
You can then store it in your cellar.

http://www.telegraph.co.uk/finance/economics/interestrates/4528415/Savings-Where-should-I-put-my-money.html