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Beleaguered savers looking for even a vaguely decent rate of return on their cash over recent years may well have felt like they have been banging their heads against a wall – a consequence of nigh-on six years of ultra-low interest rates.

The outlook has not much improved either, with murmurings that we may not see rates go anywhere for a while. But there are ways of getting your cash growing – such as by investing it – and you don’t have to be Warren Buffett to make it work.

This comes with its own set of risks but arguably the best way in is via a fund – a pooled investment which spreads your cash across a wide range of stocks. There will be ups, and indeed downs, but over the long-term returns can be very rewarding. After all, the UK’s FTSE 100 is up 32% over the past three years – a return that cash savers can only dream of.

And don’t worry – investing isn’t just for the super-rich. By investing through a discount broker like Hargreaves Lansdown or The Share Centre, you can squirrel away as little as £50 a month. These firms, among others, supply lots of free research and publish lists of their own top recommended funds. Here are some of the more popular options…

 

 

1. Equity Income funds

These funds invest in the shares of dividend-paying corporations. Neil Woodford, arguably Britain’s answer to the aforementioned ‘Sage of Omaha’, runs a vehicle which does just this, and he has a decent track record of turning a little cash into a lot. In fact, previously he’s managed to grow £10,000 into £230,000 over 25 years. He recently launched a new fund, CF Woodford Equity Income, which has proved very popular.

2. Commercial Property funds

30 St Mary Axe, aka London’s Gherkin, was recently sold for a not insignificant £700m. But you don’t have to have such deep pockets to get a piece of the action. Investing in commercial property funds gives you the chance to spread your cash over a wide variety of properties such as offices and retail parks, and the rents paid can provide a stable income. Commercial property funds have been doing the business too of late, with the typical fund up more than 17% in the past year.

3. Bond funds

Bonds are ‘IOUs’ issued by governments and companies looking to raise money. When an investor buys a bond, they lend their cash for a set period of time and in return, the issuer pays interest to the investor. Bonds funds are generally less risky than shares but the average corporate bond fund is still up by a decent 11% in the last year.

 

4. Fill your boots

Variety is not so much the spice but rather a necessity when it comes to investing. As such, look at multi-asset funds. Offered by the likes of fund groups such as JPMorgan and F&C, they invest across only equities, bonds, property and (yes) cash — but a variety of other assets too. You don’t have to have coffers like Buffett to invest. Just go via a discount broker and see what they tip.

5. Cash

For the less intrepid keen to take zero risk, the only option really is cash. But to really make it work, you’ll have to say bye-bye for a while and lock it into a fixed rate deal. The best deal on offer right now comes from Vanquis Bank, which is paying 3.02% but it’s a five-year deal. Find more best-buy offers at Savingschampion.co.uk.

 

Philip Scott is an award-winning financial journalist

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