“With their remaining cash savings, they should of course be trying to achieve the best rates of interest possible, while being mindful that only deposits of up to £85,000 per person are protected at each UK bank under the Financial Services Compensation Scheme.
“Where savings are reallocated into investments, the right selection within a balanced portfolio will of course depend on the goals, time horizon and risk profile of each person.
"However, when yields are so low on bonds, equities continue to be the relatively more attractive major asset class in the current environment.
"With nominal bond yields relatively unattractive, alternative assets have a role to play to help do the job of dampening volatility. These can include absolute return funds, private equity and infrastructure.”
Ross Leckridge, associate director at Johnston Carmichael Wealth, agrees that it is a priority to have enough cash tucked away in case of the unexpected.
“There is always the natural inclination to add more monies to investment markets. However, it is key to ensure that you have a suitable emergency fund stored away first.”
And then clients can either save or spend what they have amassed, as he explains: “They can use Isas for tax-free growth and withdrawals; Junior Isas if they have children; pensions for tax relief on contributions and which are inheritance tax friendly; and structured products, that is, investments tied to the performance of various indices.
“Alternatively, they can use the savings to tick off some lifestyle goals on their list that they have been unable to achieve in previous years, such as holidays, buying a new car or undertaking home renovations.”
Where the clients do not need the spare cash for themselves, Shields refers to gifting: “Gifting to the next generation could be a tax-efficient way of using the money, especially if the current owner has IHT issues.”
Clients may also welcome the opportunity to try something different, as Patrick Christie, graduate trainee financial planner at WealthFlow, says: “For those uncomfortable with investing or for those operating on short investment timescales, premium bonds are a potentially fun and novel way to use capital. Backed by the government, capital remains safe but brings the possibility of large prizes.”
He adds: “For those looking to make a difference to the world with their money, the new NS&I green bonds are an intriguing proposition. The interest rates are relatively poor, but for many consumers, the ethical credentials outweigh the low returns.
"Maybe we will see a rush to green bonds following COP26?”
Fiona Nicolson is acting deputy features editor at FTAdviser
