God, has it really been 20 years since I first dropped a few plucky pounds into my workplace pension? 

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What caught my eye this week.

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The Rule of 300 is a shortcut that enables you to estimate how much money you’ll need for retirement or to achieve financial independence.

Even more excitingly, it enables you to estimate what any particular line item in your budget will require in terms of capital funding.

That’s right! The rule of 300 turns amorphous future you into a flesh and blood person with their own wants, needs, and bank statements.

And if future you wants – or needs – a monthly subscription to a luxury hot chocolate delivery service, then the Rule of 300 will tell you how much you’ll need to have saved up to pay for it.

Most of us find it hard to imagine paying for stuff several decades hence. But the Rule of 300 bends the space-time continuum to make it easier.

Basically right but specifically wrong

Let’s get one thing straight upfront. The Rule of 300 is not a scientific law that can’t be broken. It will probably always be off a bit. It’s just a rule of thumb.

Some of the assumptions behind the Rule of 300 are open to debate.

Moreover, thinking we can predict exactly what we’ll be paying for in 30 years’ time – from robot insurance to our annual getaway to the moon – is delusional.

But as always with investing: what’s the alternative?

All forecasting methods have downsides. Few compensate by being as simple as the Rule of 300.

We’ll return to the caveats later. Once you know what assumptions you disagree with, you can replace them with your own guesswork.

Let’s first outline the rule as it stands.

What is the Rule of 300?

The Rule of 300 is dead simple. To use it you need only two numbers – and one of them is always 300.

Take your monthly spending. Multiply it by 300. The result is how much you’ll need to have saved up to keep living like you do today after you quit your job.

Let’s say you currently spend £3,000 a month.

£3,000 x 300 = £900,000

The Rule of 300 says you’ll need £900,000 to quit work and still pay your bills.

(Or to tell The Man to go hang. Or to safely smirk in meetings. To swap your job to do something less boring for money instead. Or to keep loving your job with a safety buffer. You decide!)

Be sure to multiply 300 by your monthly expenditure today. Not by your monthly salary, or a guess at what things will cost in 20 years, or by two-thirds of your income, or anything else.

Simply enter your expenditure as it stands. The Rule of 300 tells you what you’ll need to have saved to keep spending this amount from your capital. (Probably!)

Do not include any regular ISA or pension contributions in your budget. For the purposes of this calculation we’re assuming you stop saving and start spending.

A spartan guide to using the Rule of 300

The Rule of 300 is the easiest maths you’ll ever do in personal finance. But to save you even more bother, here’s a table that shows how much you’ll need saved according to the Rule of 300, based on various monthly expenditures:

Source: Author’s calculations

Depending on your lifestyle and your penchant for caviar and avocado on toast, those numbers may seem dauntingly high or very achievable.

But are you in the “HOW MUCH?” camp? Then the Rule of 300 is extra useful. It helps you see what your monthly spending habits will cost you in capital terms.

Let’s say you spend £12 a month on Amazon’s music streaming service. Multiply that by £300, and voila! You can see you need £3,600 saved today to keep the music playing indefinitely.

Not so bad, perhaps. However you may have other more onerous commitments:

Source: Author’s research (and bills)

I’m not judging. If your idea of retirement bliss is playing golf every day, then something has gone badly wrong if you’re not planning on paying for golf club membership.

However by looking through the lens of the Rule of 300, you might be motivated to cut back those things you don’t care about so much. This way you can reduce how much you need to save for financial freedom.

Maybe you were happy paying £10 a month for a Disney+ subscription when your kids were young. But now they prefer YouTube and you’re done with the Star Wars spin-offs.

Cancel the Disney subscription and that’s £3,000 less you’ll need saved up before you can declare financial freedom.

(Obviously you should be doubling down on your Monevator membership, though. We’ll keep you on the straight and narrow…)

The safe withdrawal rate (and the caveats)

The maths behind the Rule of 300 is based on a safe withdrawal rate (SWR) of 4% a year.

As you probably know, the SWR is said to be the money you can spend every year from your portfolio without (too much) risk of it running out before you die.

Here’s how the Rule of 300 works. Let’s say your monthly expenditure is £2,000. Over a year that’s 12 x £2,000 = £24,000. To find the capital required to fund that with a SWR of 4% we must solve (4% of Capital = £24,000) which is equivalent to (Capital = £24,000/(4/100)) which works out at £600,000. Alternatively, the Rule of 300 says multiply £2,000 x 30 0= £600,000. Ta-dah! Same!

Now, to say the safe withdrawal rate is controversial is an understatement. It’s the personal finance equivalent of the Kennedy assassination. People take it to mean different things, some of which may be contrary to the original research.

Some people are sceptical because it’s based on US investment returns for starters, which have been strong versus the global average. They say 4% is too high.

Others believe that the strong equity returns we’ve enjoyed for over a decade may mean future return expectations (and hence the SWR) should be lower.

And yet others believe 4% is too pessimistic. Bond yields have risen a lot. And anyway, the 4% rule was always too stingy in most scenarios, they argue.

Newer thinking – and our own Accumulator – even claims the SWR strategy can be improved by holding extra assets and using a variable withdrawal strategy.

Finally, some investing Luddites like me presume we’ll never touch our capital, but rather live off our income. We often coincidentally target an income yield of around 4%, even though the SWR research was based on spending everything.

Roll your own Rule of Whatever

I’m not proposing to win the SWR debate today. Just know that you can tweak the Rule of 300 to suit your own beliefs by reworking the maths to suit.

• Want to target 5% a year as your withdrawal rate? Then you can use a ‘Rule of 240’ to estimate how big your pot must be.

• Think 3% is more like it? For you it’s the ‘Rule of 400’.

Personally though, I’m sticking to the Rule of 300.

You’ll read all kinds of authoritative-sounding comments about what is the best number to use for either the SWR or as a rule of 300 multiplier.

Reflect on them, certainly. But understand that nobody knows, because we can’t be sure how our investments will pan out, how long we’ll live, nor how much money will really be required in the future for a decent standard of living.

Anyway, it’s only a rule of thumb. Keep it simple, Sherlock.

Not one rule to rule them all

Despite my rather analytical education, I’m not one for precise modelling in anything other than the underwear department.

Personally I don’t track my expenses or stick to a budget. I prefer to keep a rough idea of cash flows in my head.

I’m also not one for working out the exact amount of capital a person needs to target for some potential retirement in 23 years and three months’ time.

Back when I was still on my path to FIRE, I did sometimes look at what was needed to replace my income, but only as a ready reckoner. (This method targets pre-tax salary, unlike the Rule of 300’s after-tax spending. Both have their uses.)

I’ve nothing against precision, if that’s your bag. There are pros and cons to most approaches, and we can all learn from each other.

However even if you’re more particular than Dr Spock, note that the Rule of 300 demands zero effort in your everyday thinking.

You may have a 30,000-cell spreadsheet at home in the lab, but the Rule of 300 can still be a useful shortcut.

Much better than nothing

Most people don’t even have a financial plan written on the back of a napkin. They haven’t the foggiest what they’ll need to have stashed away for when they no longer receive a regular pay cheque.

Even high-net-worth individuals can seem deluded, while many of the less wealthy appear to think they’ll enjoy round-the-world cruises on the back of saving £50 a month.

At the other end of the spectrum, some people assume they’ll need so much money put away that ever stopping working is unrealistic.

Does any of that sound like you, or someone you know? Then the Rule of 300 can be a good start in getting a grip on things.

I repeat, it’s not a scientific law.

But in terms of changing how you think about your own financial needs, the Rule of 300 might be as significant for you as that falling apple was for Sir Isaac Newton!

The post Using the Rule of 300 to estimate how much money you need for financial freedom appeared first on Monevator.

Painting the Forth Bridge with a cotton bud would be more thrilling. But it would not have produced a quick and easy overview of all the main execution-only investment services.

Investment platforms, stock brokers, call them what you will… we’ve stripped them back to basics for you to eyeball over a cup of cocoa and a handful of your favourite stimulants.

What’s changed with this update?

^{Disclosure: Links to platforms may be affiliate links, where we may earn a commission. This article is not personal financial advice. When investing, your capital is at risk and you may get back less than invested. With commission-free brokers other fees may apply. See terms and fees. Past performance doesn’t guarantee future results.}

Trading 212 has soft-launched its SIPP. Not a fee in sight, nor a drawdown option, and you may have to go on a waiting list for the time being.

Not to be outdone for nano fees, Stateside brokerage Robinhood is now offering Brits the chance to store their US stocks in a stocks and shares ISA. FSCS protection is sadly lacking, though.

Finally, you can bag a brilliantly priced LISA at UK broker EQi (Equiniti as was). Hat tip to Monevator reader Remarkable Mayonaise for spotting that one.

Who’s the best broker?

It’s impossible to say. There are too many subtle differences in the offers. The UK’s brokers occupy more niches than the mammal family. And while I know which one is best for me, I can’t know which one is right for you.

What we have done is laser focus the comparison onto the most important factor in play: cost.

An execution-only broker is not on this Earth to hold anyone’s hand.

Yes, we want their websites to work. We’d prefer them to not screw us over, go bust, or send us to the seventh circle of call centre hell. These things we take for granted.

So customer service metrics are not included in this table. It’s purely a bare-knuckle contest of brute cost for services rendered.

On that basis  our ‘Good for’ column reads as below.

Commission-free brokers

• InvestEngine, Freetrade, Lightyear, Prosper, Trading 212, and IG

These are commission-free brokers. It’s always worth looking at a commission-free broker’s ‘How we make money’ page because – rest assured – they will be earning a buck, one way or another.

Just search that topic on their websites.

If you find commission-free brokers unsettling, then stay under the FSCS £85,000 investor compensation limit or use a broker that charges fees directly. You’ll find some very competitive offers in our table.

Prefer paying directly?

ISAs and GIAs

• Scottish Widows

SIPPs

• Vanguard up to around £60K portfolio value
• Interactive Investor £60K – £100K
• Fidelity and AJ Bell £100K+ (ETFs only, not funds)

The best choice for you depends on how often you trade and the value of your accounts, plus your personal priorities around customer service, family accounts, flexible ISAs, multi-currency accounts, and so on.

Our ‘Good for’ choices are purely cost-based. We assume 12 buy and four sell trades per year. Buy trades use a broker’s regular investing scheme when available.

Using the full table

We divide the major UK brokers into four camps:

• Flat-fee brokers – these charge one price for platform services, regardless of the size of your assets. In other words, they might charge you £100 per year, whether your portfolio is worth £1,000 or £1 million. Generally, if you’ve got a large portfolio then you definitely want to look here. Bear in mind that fixed fee doesn’t mean you won’t also be tapped up for dealing monies and a laundry list of other charges.

• Percentage-fee brokers – this is where the wealthy need to be careful. These guys charge a percentage of your assets, say 0.3% per year. For a portfolio of £1,000 this would amount to a fee of £3 – but on £1 million you’d be paying £3,000. Small investors should generally use percentage-fee brokers. However even surprisingly moderate rollers are better off with fixed fees. Many percentage-fee brokers offer fee caps and tiered charges to limit the damage.

• Commission-free brokers – these upstarts apparently don’t charge you at all. Their marketing departments have it easy, simply pointing to £0 account charges and trading fees costing diddly squat. So why don’t these firms go bankrupt? Because they make up the difference using other methods. Revenue streams can include higher spreads, no interest on cash, and cross-selling more profitable services.

• Trading platforms – brokerages that suit active investors who want to deal mostly in shares and more exotic securities besides. Think of noob-unfriendly sites like Interactive Brokers, Degiro, and friends.

Our table looks complex. But choosing the right broker needn’t be any more painful than checking it offers the investments you want and running a few numbers on your portfolio.

Help us find the best online broker for all of you

Our table’s ongoing vitality relies on crowd-sourcing.

We review the whole thing roughly every three months. But it can be kept permanently up-to-date if you contact us or leave a comment every time you find an inaccuracy, fresh information, or an investing platform you think should be added.

Thanks to your efforts as much as ours, our broker comparison table has become an invaluable resource for UK investors looking to find the best online broker.

Take it steady,

The Accumulator

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Oil prices continue to bounce about with every speech and social media post put out by the Iran war’s belligerents [writes The Frugalist, who has the reins this weekend].

But the overall trend for prices is upwards. And that means increasing financial pressure on energy-intensive businesses and the electricity grid more generally.

Especially when you consider that the Strait of Hormuz normally carries a fifth of liquefied natural gas (LNG) exports.

Think back to 2022 – LNG was cited as a key solution to the challenge of weaning off Russian gas imports.

Oh dear!

President Trump has ​praised​ the UAE’s decision this week to leave OPEC. But whatever happens with the oil cartel is unlikely to reverse the prices for gas and oil while conflict continues in Ukraine and Iran.

Besides, we have known for a long time that with growing global energy demand, a limited supply, and the increasing expense of extraction, fossil fuel prices would likely increase.

Okay, there might be the occasional reprieve. (More fracking, anyone?) But oil is never going to be cheap and abundant again.

Heating hurts

The situation is worse if you rely on physical fuel delivery to heat your home.

The UK government can’t fix the geopolitical issues, but at least it has expanded its Boiler Upgrade Scheme. This will now provide up to £9,000 in grants for households that use heating oil or liquefied petroleum gas to switch to heat pumps. This is separate from the direct funding for affected households that comes via local authorities.

How many such houses will prove suitable for getting the best out of a heat pump is a different question, however.

Can solar rescue us?

I’ve looked into solar myself on multiple occasions. Not because it makes a compelling alternative to investing in a global ETF, but because I like the principle of DIY-ing my own energy production. Saving on energy bills would justify the expenditure.

Now, solar panels have been plummeting in price. But installation costs are still a problem.

In fact when it comes to my own house, the scaffolding is so complex that I’d be several thousand pounds down before I’d even bought a panel.

Germany has led the way with a cheap and cheerful alternative – plug-in solar, where panels are plugged into an inverter and then directly into your mains. The electricity generated then flows to where it’s needed, without electricians, dedicated circuits, or formal declarations.

You’re free to put such panels on fences, shed roofs, or even to mount them on a wooden frame. (I can foresee my DIY skills and a large bucket of nails coming in handy again!)

The media has been getting into the question of whether plug-in solar is economically worthwhile.

But other, more thorny issues remain. Such as whether the panels present a safety risk – especially given British electrics have oddities that other countries haven’t had to worry about.

Solar flares

I’ve noticed more than a few people seem to have decided to jump straight in with plug-in solar, even before government legalisation. Many vendors report they’ve sold out.

This may prove premature. I expect home insurers will be paying especially close attention to fires with large claims attached to see if unapproved inverters were plugged into the mains.

Also, if plug-in solar is only an option for homeowners and not the rental sector, then that will limit their beneficial impact. Figuring out a balance between making plug-in solar safe, not exposing landlords to liability, and enabling renters to install their own panels will be tricky. And I expect the government will still get some flak for not doing it quickly or safely enough.

Admittedly, fitting a few hundred watts of solar panels to hundreds of thousands – even millions – more homes won’t instantly get us off fossil fuels.

But even if it looks like plug-in solar will take a few years to pay off financially, as soon as the standards are approved and the safety aspects sorted, I’ll be at the front of the supermarket queue for my kit.

Hopefully, just in time to pair some panels with the summer BBQ.

On that note, I hope you have a great Saturday!

From Monevator

Handbags at the dawn of the AI era – Monevator

Cash total returns: a long run index for DIY investors – Monevator

From the archive-ator: Reasons to rent a house instead of buying – Monevator

News

Bank of England votes to hold base rate at 3.75% – The Intermediary

High Street sales in biggest drop for more than 40 years… – This Is Money

…with stalwart outlet Claire’s closing 154 stores – This Is Money

Pensions Schemes Bill moves forward with ‘guardrails’ – Pensions Age

Edinburgh Worldwide admits defeat to Saba Capital – City AM

British Airways owner to raise air fares as fuel soars – This Is Money

BP profits more than double as Iran war sends oil prices higher – BBC

UAE quits OPEC – Sherwood

Savers still love their cash ISAs – Simon French via X

Products and services

^{Disclosure: Links to platforms may be affiliate links, where we may earn a commission. This article is not personal financial advice. When investing, your capital is at risk and you may get back less than invested. With commission-free brokers other fees may apply. See terms and fees. Past performance doesn’t guarantee future results.}

NS&I’s new fixed-rate savings accounts pay up to 4.5% – M.S.E.

Mortgage borrowers ‘left in limbo’ by Bank Rate freeze – Moneyfacts

Get up to £1,500 cashback when you transfer your cash and/or investments to Charles Stanley Direct through this affiliate link. Terms apply – Charles Stanley

What life insurance actually costs – Which

Middle East crisis: will your travel insurer cover you? – M.S.E.

Get up to £200 cashback when you open an Interactive Investor SIPP. Terms and fees apply, affiliate link – Interactive Investor

Saving with eSIMS for travelling abroad – Be Clever With Your Cash

What’s happening to house prices? – Which

Grade II-listed homes in England, in pictures – Guardian

Comment and opinion

Banning payment for order flow is an EU blunder the UK shouldn’t repeat – City AM

Why private equity is likely in worse shape than private credit – Verdad

Diversifying during periods of positive stock-bond correlation – 7 Circles

Politics could push UK bond yields higher… – ING

…or has the gilt sell-off already gone too far? – JP Morgan

Naughty corner: Active antics

Are investors over-valuing Corning’s AI infrastructure business? – Morningstar

Seagate’s value continues to soar – Yahoo Finance

Tech stocks suffer after reports that OpenAI missed key targets – Sherwood

Will emerging market pioneer Mark Mobius be vindicated? – Morningstar

Prediction markets racing to ban insider trading – Fortune

The 15 stocks that returned the most over the past decade – Morningstar

Running away with it mini-special

How the two hour marathon barrier was broken – The Conversation

Adidas shares rise in wake of London Marathon sensation… – This Is Money

…though investors need to watch out for Chinese competitors – BBC

Kindle book bargains

Antifragile by Nassim Taleb – £0.99 on Kindle

The Big Short by Michael Lewis – £0.99 on Kindle

The Art of Statistics by David Spiegelhalter – £0.99 on Kindle

Not the End of the World by Hannah Ritchie – £0.99 on Kindle

Or pick up one of the all-time great investing classics – Monevator shop

Environmental factors

Air pollution during pregnancy may harm babies – Guardian

European sea temperatures reach highest levels recorded – Guardian

UK supermarkets to start selling plug-in solar panels… – The Independent

…but legislation might be needed to ensure renters can benefit – i Paper

Plug-in hybrid cars can be surprisingly expensive to run – This Is Money

US is making Europe pay for its half-hearted electrification… – Geoeconomic

…though the UK broke its solar generation record again – PV Magazine

Robot overlord roundup

White House memo claims mass AI theft by Chinese firms… – BBC

…while China blocks Meta’s purchase of Chinese AI firm – Reuters

Microsoft’s GitHub shifts to metered AI billing amid cost crisis – The Register

Can AI predict fund managers’ trades? – K.O.I.

Microsoft and OpenAI loosen ties – Spyglass

Switching AI vendors at scale isn’t easy – The Register

Not at the dinner table

US charges ex-FBI director James Comey for an Instagram post – Guardian

King Charles’ subtle but striking warning to America – CNN

How Péter Magyar toppled Viktor Orbán – The Bulwark

Hungary’s business elite pivots away vanquished PM [Paywall] – FT

Russian super yachts skip the Hormuz blockade – BBC

Off our beat

Electronic warfare is sowing confusion in cockpits – CNN

Australian teens say social media ban is not working – Fortune

What does the Zoological Society of London do? – Guardian

The gamers who lost money on Peter Molyneux’s last project – Ars Technica

Why low-frequency sound might explain haunted houses – Sci News

And finally…

“In most of our decisions, we are not betting against another person. Rather, we are betting against all the future versions of ourselves that we are not choosing.”
– Annie Duke, Thinking in Bets

Note this article includes affiliate links, such as from Amazon and Interactive Investor.

Weekend Reading – featuring the week’s best money and investing articles from around the web – can be read by any logged-in Monevator member. Alternatively please subscribe to our free email newsletter to get future editions direct to your inbox.

The post Weekend reading: Sunny side up appeared first on Monevator.

The year is 2050. It’s five years since the US president handed over the nuclear launch codes to a possibly-sentient artificial intelligence. More tangibly, the AI revolution is all around us in clean and decarbonated air, abundant crops, and the banishing of cancers that slew millions just a generation ago.

The post Handbags at the dawn of the AI era [Members] appeared first on Monevator.

Academics approximate returns to cash by resorting to treasury bill or money market rates. But what might a savvy UK investor have achieved with money in the bank?

Monevator is devoted to DIY investing after all, and so an everyday cash savings index would better reflect the experience of individual investors. It would also form a useful reference point for future expectations.

And so without further ado (I’ve always wanted to say that!) I present the Monevator cash total returns index.

A UK cash savings index

Our new cash index tracks the total return of UK savings accounts based on monthly interest rate figures going back to 1900.

I’ve relied upon three sources:

• Pre-November 1939: the Bank of England’s A Millennium of Macroeconomic Data.
• November 1939-March 2004: the Building Societies Association’s BSA Yearbook.
• April 2004-present day: Money Saving Expert’s amazing email newsletter archive.

My profuse thanks and additional hat-tips go to Monevator readers Alan Stocker, who suggested using the BSA and MSE sources, and Snowman, whose ongoing comments provided the motivational juice to plough through scads of dusty old interest rate records.

I’ll explain the decisions I’ve made in constructing the index at the end of the article. But first it’s high time I presented the facts on cash savings in the UK.

Spoiler: they’re not pretty.

The money illusion

The green cash uplands shown in the graph below represent the comforting sight of interest piling on interest. But the wavy red line that goes more or less nowhere is the return on cash after inflation:

Data from Millennium of Macroeconomic Data for the UK, ¹Building Societies Association (BSA) Yearbook, Money Saving Expert, and ONS. April 2026.

The annualised real return on UK cash savings is 0.1% for the period 1900-2025. Miserable!

It’s a performance that stacks up poorly against other mainstream asset classes:

• The money market annualised return is 0.4% (0.3% after fees)
• All stocks gilts is 0.8% (0.7% after fees)
• World equities is 5.6% (5.5% after fees)

In a nutshell, those returns and the chart above explain why we urge readers not to put everything into cash. The green stuff barely scrapes past against inflation over time.

Of course cash is not the worst place to be over some shorter periods, as we saw in 2022. And there are good reasons to always keep some readies in reserve.

However holding a large wedge will likely cost you as the years turn into decades.

The silent hissing of a slow puncture, or the quiet boiling of that unlucky frog come to mind.

Hard times

The next chart highlights cash’s longest losing streaks in real terms – including a 72-year whopper:

We’ve shared some godawful charts over the years on Monevator. But this one is right up there.

The red zones show you the length and depth of cash drawdowns, as viewed through inflation-adjusted googles. They demonstrate that cash can be a perilous place to store your wealth if you overly rely on it.

The same is true of all asset classes, admittedly. But cash is deceptive because it looks so stable in nominal terms.

However as the chart shows, cash can periodically inflict huge losses – and the culprit isn’t hard to find:

As we’ve all experienced lately, the cash-gobbling monster of inflation isn’t a blight that’s faded into history like smallpox, or grit in your codpiece.

Cast your eyes back to the cyan growth line in our chart above. Cash has only performed well in real terms over a few short periods: namely 1921 to 1933 and 1982 to 2008.

On both occasions you could have done better in bonds.

The not-so-flash crash

Here’s the full drawdown chart for cash’s nastiest ever bear market.

The record shows:

• Cash spent over 72 years in negative territory
• It took 48 years to sink to the bottom
• Losses peaked at -58% in April 1981
• The recovery took another 24 years until December 2005

Money markets experienced similarly severe losses. UK government bonds suffered an even deeper, if shorter, drawdown. (See our previous retelling of the tale of the UK’s worst ever bond market crash. Prepare a stiff drink.)

Essentially, successive UK governments failed to control inflation. That wrecked the real returns from fixed income assets.

The red gouge above partly explains why my grandparents – born around 1910 – were so hard up. All they had were savings with the Post Office. But whatever they put away was murdered by inflation. Especially in the early 1940s, the early 1950s and, most savagely, in the 1970s.

Yet go back to the first chart in this article and cash’s nominal return curve betrays no hint of these losses that lasted a lifetime.

Cash after the Global Financial Crisis

Let’s fast forward.

The competitive savings market we enjoy today was unknown to previous generations.

British savers had few options until the cosy arrangements of our banks and building societies were broken up by deregulation from 1987 onwards.

Two decades later, the retail savings market was flourishing on the eve of the Credit Crunch, as documented by Money Saving Expert’s empowering weekly emails.

Easy-access rates topped 6% as the first rumbles of the oncoming storm rolled across the consumer landscape in 2007. ²

But within a few months, Britain experienced its first retail bank run in 140 years. Keystone institutions teetered, and the economy locked-up.

The Bank of England cut rates to historic lows, and real cash returns fell into the red:

Since January 2009, cash has been under water for all but one month up to the time of writing. That’s 17 years of drawdown and counting.

The chart shows that cash wasn’t a save haven either when interest rates were slashed to near-zero, nor when they rebounded post-Covid.

Indeed, the jagged plunge to the latest cash trough (-15% in May 2023) was a direct consequence of the 2021-23 inflationary surge. The only good thing about cash during the recent cost-of-living crisis was its drawdown wasn’t as bad as bonds.

Frankly, neither cash nor bonds are the place to be when inflation breaks loose.

Please read our previous hunt for the best inflation hedge for more.

Conflict of interest

Before I embarked on this project, I had thought a fleet-footed saver may have beaten money market rates. But the data says otherwise.

The next chart shows how British savers have mostly lagged the official Bank of England rate since 1900. (Money market returns usually track the central bank rate like a lovelorn teenager):

There’s a lot of economic history packed into this chart, but the takeaway is that savers have only outperformed the going rate during two eras.

One was upon the outbreak of World War 2 up until Churchill’s re-election as Prime Minister in October 1951.

The other shows up in the MSE era of consumer choice from 2004. Up until the Global Financial Crisis, the green cash rate tracks ahead of the red Bank Rate as savers were offered very generous terms – the likes of which haven’t been seen since.

The Bank Rate is then slashed from 5% in September 2008 to just half-a-percent by March 2009, as the scale of the crisis became clear.

Still, if you kept your job, a chunky rate tart’s premium emerged as different banks and building societies needed to suck in cash periodically to balance their books.

Switching to whichever institution was most in distress at the time was perhaps not my soberest ever financial move (reader, I was a rate tart) but hey, the British Government was playing backstop so it seemed okay.

In my view though, the savvy saver’s edge has hardly been worth the effort since 2022, though the premium perked up a little in 2025 – as you can see at the tail end of the chart.

Inside the cash total return index

There were a surprising number of decisions to make in assembling the index – specifically in the MSE-powered ‘best buy’ era.

The most important thing to say is that the index is composed of the compound interest rates for short-notice savings deposit accounts.

Up to October 1939 – We use the ‘Interest rate on sight deposit accounts’. The Bank of England defines a sight deposit account as:

…where the depositor has access to the entire balance of the deposit, without incurring any penalty, either on demand or by close of business the day following that on which the deposit was made.

November 1939 to March 2004 – Interest figures come from the rates on ordinary shares accounts provided by the Building Societies Association. An ordinary shares account was just a standard savings account accessible using a passbook. (Ask your grandparents. Or me! I had a Post Office passbook account from childhood until I looted it as a desperate 21-year-old trying to make rent.)

April 2004 to present day – The best interest rate collated by Money Saving Expert at the end of each month, provided the account fulfils the following criteria:

FSCS protected (or European equivalent schemes prior to Brexit).

95 days or less notice required. This provision bears comparison with historical treasury bill rates which are typically for 3-month bills.

Introductory rates are included so long as they last at least six months.

Exclusions:

Cash ISA accounts due to historically severe caps on balances.

Fixed term rates – these accounts are subject to interest rate risk.

Accounts that limit withdrawals to fewer than 12 per year or impose interest rate penalties for withdrawals.

Minimum deposit requirements of greater than £1,000 or a maximum balance of less than £85,000.

Current accounts, because they’re typically subject to restrictive terms and conditions including tight caps on bonus interest rates.

Exclusively postal or in-branch accounts.

Cash back bonuses.

Tax rates and fees as per standard practice for indices.

The notional saver

Indices by definition are based on a set of guidelines that simplify the real world in order to produce a snapshot of a market.

The Monevator cash total return index is based on what a switched-on UK retail saver could have earned on liquid cash savings from 1900 to the present day.

My notional saver paid attention to rates and moved their money to the best available product. But they did not use exotic or highly restrictive products.

They’re not the average saver, but neither do they have unlimited time and the motivation to pursue every savings avenue either.

Crucially, the index needs to be comparable with retail investment opportunities where an investor can commit almost as little or as much as they like to any given asset class.

For that reason, I’ve only admitted accounts that allow for low minimum balances and high maximum balances.

I’ve also ruled out fixed-term savings because they contain embedded interest rate risk. ³

In the modern era, financial institutions have come up with every wheeze they can think of to top the best-buy tables for long enough to hit their targets, whilst avoiding attracting so much cash that it craters their bottom line.

So I’ve had to filter out much of that fiendishness in order to balance the features of a genuinely desirable cash product: liquidity, accessibility, and competitive interest rate.

Finally, I’m not making a claim about what any individual could have earned. The index is beatable if, for example, you took term risk at the right time, or used interest-boosting techniques like current account stacking.

(Current account stacking enables a saver to jack-up their return – and partially circumvent balance caps – by opening multiple accounts that pay sweet rates of interest on restricted amounts of cash. Perhaps you opened ten accounts, perhaps you opened 20. It was a viable strategy for juicing your cash returns in the ZIRP era. It didn’t move the needle as much as I hoped when I ran the numbers, though. But that’s another story.)

Alright, that’s it for now. I’m very much looking forward to the thoughts, reactions, and critiques of the Monevator Massive. And I reserve the right to adjust the index in light of any bright ideas you have!

Take it steady,

The Accumulator

1. Thomas R, Dimsdale N. 2017. “A Millennium of Macroeconomic Data for the UK.” Bank of England.
2. You could even bag yourself 8% on balances of up to £2,500 via an Abbey National current account.
3. That is to say, adverse interest rate moves will leave you stuck in an uncompetitive product from time-to-time.

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What caught my eye this week.

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Perhaps, like Frank, you’ve had too few regrets to mention. But unfortunately, when it comes to investing, I’ve had plenty.

About what I invested in, and what I didn’t. About when I bought, and when I sold.

Unfortunately, it seems those regrets, and my fear of future regrets, can play havoc with my investment decisions. According to Daniel Kahneman in Thinking, Fast and Slow:

Investors are prone to regret, and the anticipation of regret shapes much of their behavior.

And from Hersh Shefrin in Beyond Greed and Fear:

Regret aversion – the tendency to avoid decisions that could lead to regret – often leads investors to make poor choices.

How then am I to take reasonable decisions with my investments?

Am I just a rabbit frozen in the headlights of my future regrets? Or are there some practical steps that will help me sleep at night?

Minimise regret

It’s comforting to know that Harry Markowitz, the Nobel-prize-winning economist who developed Modern Portfolio Theory, suffers from the same challenge.

Markowitz once said in an interview:

“I should have computed the historical co-variances of the asset classes and drawn an efficient frontier. Instead I visualized my grief if the stock market went way up and I wasn’t in it – or if it went way down and I was completely in it. My intention was to minimise my future regret. So I split my contributions 50/50 between bonds and equities.”

Perhaps the best way to minimise future regret is simply to make fewer decisions.

Decisions, decisions

A good reason to avoid investing in active funds (aside from the fact that they will on average underperform an index tracker) is the number of decisions it requires.

Possible future regrets are manifold. Did I choose the right market? The right investment style? The right manager?

And if I start to regret any of those decisions then I’m facing a timing problem. Do I cut my losses now or do I hold on in hope of a turnaround?

According to Michael Pompian in Behavioral Finance and Wealth Management, the odds of me making the right call are not good:

The fear of regret keeps investors from buying when prices are low and from selling when prices are high.

Conversely, investing in a global tracker requires just one decision: to invest in equities. There’s a lot less to stress over. A lot less to regret.

The key is simplicity.

Keep it simple

I greatly admire the analysis by The Accumulator on the Slow and Steady and No Cat Food portfolios. I’m sure they would lead to good outcomes.

The question is, can I be trusted to manage that many separate elements?

I fear not.

My penchant for analysis means I will be tempted to revisit the asset split every time I rebalance. That temptation will inevitably lead to bad decisions.

As Oscar Wilde’s Lord Darlington observed: “I can resist everything except temptation.”

Sticking to just two or three funds – or even a single multi-asset fund – means I have fewer temptations to fiddle.

Fewer moving parts in a portfolio means fewer decisions to make.

Avoid extremes

It’s harder to think about future regrets when markets are high and rising, and too easy to get caught up in maximising my imagined future returns.

But investing 100% in equities, or bonds, or bitcoin, leaves me susceptible to regrets when, at some point, the market inevitably moves against me. A more moderate strategy allows me to remain sanguine about such moves.

As Morgan Housel suggests in The Psychology of Money:

Avoid the extreme ends of financial decisions. Everyone’s goals and desires will change over time, and the more extreme your past decisions were the more you may regret them as you evolve.

It’s not about removing all risk. Just think through the possible outcomes and how you’d feel about each.

Good enough

The bulk of my portfolio is dominated by global trackers, Vanguard LifeStrategy, short-term gilts, and cash.

It’s not perfect. I’m not sure it’s even logical. I have too much cash, my fees could be marginally lower, and I would likely have better returns with more equity.

But, for me, it’s more important to avoid regret and stick to a reasonable plan than to have a perfect portfolio.

So it may not be the best option but it’s almost certainly good enough. As Charlie Munger told us, good enough is just fine:

It’s remarkable how much long-term advantage people like us have gotten by trying to be consistently not stupid, instead of trying to be very intelligent.

Change your mind

However much I try to simplify things, there are inevitably going to be times when I change my mind.

And that’s okay. Mistakes happen and things change. Even good decisions can produce bad outcomes. Don’t sweat it. Morgan Housel again:

Embracing the idea that financial goals made when you were a different person should be abandoned without mercy versus put on life support and dragged on can be a good strategy to minimise future regret.

Break some rules

Notwithstanding all the wise quotes above, I frequently allow myself to break all the rules.

If I want to experiment with private equity, or I have a hunch that infrastructure is going to be a winner this year, then why not have a punt? I can make some mistakes and learn some lessons.

Provided I don’t invest enough for serious regrets to kick in then no harm done. It may even help me leave the main part of my portfolio alone.

The final curtain

Maybe you’re completely logical – the T-1000 of investing. Maybe you can calculate the most efficient portfolio and mechanically rebalance every year according to your finely tuned allocation until the Grim Reaper is at your door.

But personally – and I suspect along with many people – my anxiety over future regret means I don’t always make the best investment decisions.

What’s more, I’m not actually expecting this to improve. In my early investing journey, mistakes were relatively easy to accept with a shrug. But as I begin to rely more on my investments for income, the levels of regret anxiety rise further. There’s less opportunity to put things right.

The behavioural psychology books may exhort me to overcome my investing weaknesses, but that’s easier said than done. In the real world, the best I can do is try to avoid them by minimising future regret.

Non, je ne regrette rien (nearly…)

I may never reach full investing Edith Piaf. But to summarise I find it helps to:

• Take fewer decisions
• Avoid extremes
• Keep it simple
• Aim for good enough, not perfection

I often return to that earlier quote from Harry Markowitz. The fact that someone so steeped in investment analysis could take such a simple and broad-brush approach speaks volumes. It gives me hope that maybe I’ll do okay after all.

Investing will always involve uncertainty. But if I can make peace with a few inevitable regrets, my finances stand a better chance of being good enough.

I guess the sign-off should be something about doing it My Way, but I can’t quite bring myself to write it.

So I’ll just say, may your decisions be few – and your regrets fewer still.

The post Regrets, I’ve had a few appeared first on Monevator.

I needed help to sail these seas. Among the competing offers I found a trusty vessel named index investing.

While you can complete the journey in expensive luxury liners like actively managed funds or in a one-man skiff tossed hither and thither by your own stock picking, here are five reasons why a more modest-seeming vehicle – a portfolio of index funds – makes the most sense:

1. Index investing is simple

Never invest in anything you don’t understand is a repeated mantra in personal finance. Like never crossing the road between parked cars, it’s excellent advice that’s all too easy to ignore.

Happily, index investing is easy to understand, even for those with little investment experience.

• You use simple index tracker funds or Exchange Traded Funds (ETFs) to construct a diversified portfolio that keeps your eggs in many baskets.

• You make regular contributions to your funds and rebalance your portfolio as little as once a year. (Some prefer never).

• Holiest of holies: You don’t try to time the market or pick hot stocks.

2. Index investing works

Index investors will beat the average active investor after costs and taxes, according to Nobel Prize winners like William Sharpe and legendary investors like Warren Buffett.

Study after study shows that most actively managed funds are trumped by index funds over the long-term. Why? Because index trackers are dirt cheap. Their low costs nibble away less of your pie than pricier active funds, which rarely put in the consistently stellar performance required to justify their high fees.

Index investing is not a ticket to instant riches. It doesn’t aim to beat the market, but rather to capture the returns of the market. We’re putting our money on the tortoise, not the hare.

3. Index investing is affordable

Cheap index trackers can be bought from online brokers and held there for very little if you pick the right platform. You can buy in small, regular chunks and build up your portfolio slowly over time.

With a bit of confidence and self-education you can manage it all yourself. This means you avoid paying commission or fees to a financial advisor.

4. Index investing doesn’t waste your life

Stock-picking hoovers up vast amounts of time. Index investing leaves you free to sniff the roses. There’s no need to grapple with complex methodologies, pour over company accounts, or entangle yourself in charts.

5. Index investing puts you in control

Ever hire a dodgy financial advisor only to discover later you’re paying sky-high fees for mediocre funds that didn’t suit your needs? (Or was that just me?)

Knowledge of index investing strategies can help you avoid a similar fate by revealing:

• The risks you’re taking and how to dilute those risks to a level you’re comfortable with.

• How much you need to invest to achieve your financial goals.

• A DIY approach that avoids rip-off merchants and saves you a bundle in the long term.

• How to create and run a drawdown portfolio that turns your pension into a sustainable retirement income.

• Good questions to ask an advisor should you still want to hire one, which will help you find one of the good guys to work with.

To get you started we’ve a huge library of passive investing articles here on Monevator.

Been there, done that

Index investing isn’t just a nice theory for me. It’s exactly how I achieved financial independence and quit my day job early.

Okay, so now I write about investing in my spare time instead. But that should give you a clue as to how keen I am to bring this proven strategy to the most people possible.

(Well, that and it keeps me in spare bicycle parts and scones…)

Dive in – and happy investing!

The Accumulator

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What caught my eye this week.

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The best savings rates on cash have recovered from dreadful to tolerable in recent years, though generic accounts continue to sport rates as low as 1% AER.

(An AER of 1% is equivalent to £1 per year for every £100 saved. Don’t spend it all at once!)

Higher rates will have been welcomed by many Monevator readers. The low-interest era was especially tough on cautious savers who kept a lot of their wealth in a cash savings account – although clearly higher rates have had impacts elsewhere, too, from the bond market to mortgages.

Today the situation for savers is more nuanced. While accounts paying pitiful rates still abound, the market is much more competitive.

Indeed, account switchers – and of course enthusiasts like myself, who keep a keen eye on interest rates – can out-earn more complacent savers five times over.

Moreover, anyone with a large pot of cash to stash has had something of an unexpected reprieve in recent months. Albeit for unfortunate reasons.

Isn’t it Iranic?

The Bank of England’s Bank Rate had fallen steadily since late 2024.

But with the war in Iran, Bank Rate steadied at 3.75% and further rate cuts are at the least postponed. Interest rates could even rise.

This leaves our savings at the mercy of geopolitics. But whether this leads to more competition in the savings market or to banks nervously edging their rates downwards is hard to call.

Best savings accounts

Perhaps, then, you’re left wondering where you should stash your cash today – or you’d just like a lower-hassle solution to this issue of fluctuating rates?

Let’s look at the different types of accounts available, which ones pay the highest rates of interest, and consider some tricks to make things simpler.

Easy access savings

• Highest easy access rate if you open a current account: LHV @ 4.25% AER. Open its app-based current account and then open a savings account
• Highest easy access rate including a temporary bonus: Tembo Money Homesaver @ 4.75% AER, including a 1.75% bonus for 12 months
• Highest straightforward easy access rate: Charter Savings Bank Easy Access (Issue 73) @ 4.01% AER, open from £1

Easy access is the most popular type of savings account. Such accounts give you instant access to your cash, which means you can add or withdraw money as often as you like. But they also pay far higher interest rates than a typical current account.

Easy access is the best type of account to go for if you know you’ll need access to your cash within a year or so. They’re also the best option if you just don’t want to lock away your cash for some reason.

However there are generally higher-paying options than easy access. So if you apply a mindset of “I must have all my savings available when I want them”, it will cost you.

It’s generally better to divvy up your savings. If you want, say, £20,000 for emergencies and £15,000 is stored for a house move in two years’ time, then you don’t need all £35,000 in an easy-access account.

Note that interest rates on easy access accounts are usually variable, meaning they can change in future. However some do pay a temporary fixed bonus.

Not so easy…

Picking the ‘best’ easy access account is tricky. That’s because there are many accounts out there, all pitched slightly differently.

What’s more, the highest rates are usually only available with strings attached.

LHV is a strong contender at 4.25% AER, but having to open a current account is extra hassle.

The Charter Savings Bank offers a much simpler product at 4.01%. For every £10,000 saved, the difference with LVH’s best offering would only be £24 per year, pre-tax.

Charter Savings Bank tends to release a new issue every time the interest rate wobbles. (If you’ve wondered how it had reached 73 separate issues of the same account, that’s why!) You can get a competitive rate to start with, but your earnings might not increase if rates increase. You’re free to move to the latest issue though, with some minor hassle.

Tembo is an intriguing option. You might want to leave after 12 months when its 1.75% bonus expires, but getting 4.75% AER for a year is decent by today’s standards.

Tembo is actually advertising a 5.75% AER, since it’ll boost your rate by 1% if you use its mortgage service. The service comes with its own fees though, and you could be worse-off than if you’d used a fee-free mortgage broker.

Regular savings

• Highest regular saver rate if you open an app-based current account: Zopa @ 7.1% AER, open Zopa’s ‘Biscuit’ account and then open a regular saver
• Highest regular saver rate if you open a traditional current account: First Direct or Co-operative @ 7% AER
• Highest regular saver rate open to all: Monmouthshire Building Society @ 6% AER, open via its app

Regular savings accounts enable you to put money into them on a monthly basis. Usually their headline rates beat easy access deals, but there are limits as to how much you can save each month. These limits are often quite stingy!

Some regular savers only allow you to hold them for a year. Others restrict your ability to withdraw cash. And the highest-paying accounts are often tied to you also running an associated current account.

Personally, I wouldn’t open a regular savings account on its own unless it was trivially easy – for instance, if it could be opened via the app of a current account I’m already using.

If you need to find the best home for £20,000, then putting £250 away each month doesn’t achieve much. However I’ve previously written a guide explaining how to build a ladder and stash thousands into regular savers if you want to maximise your savings interest.

Notice savings

• Highest notice savings rate (180 days): The Stafford Building Society @ 4.26% AER
• Highest notice savings rate (90 days): OakNorth @ 4.15% AER, rate includes a 1% bonus for new customers only

Notice savings accounts are just like easy access accounts, but with an added rule that you must give your provider notice before making a withdrawal. In this way they can beat easy access rates without requiring you to lock away your cash for an excessively long period.

Generally, the longer the notice period, the higher the rate. It does depend on long-term projections in the money markets though.

Personally, I don’t use notice accounts, as I can usually beat their rates with easy access and regular saver alternatives. I’m more than happy to pop a few doors down the (figurative) high street if someone will pay me a fraction more interest. As customers go, I’m as disloyal as they come.

However the big advantage of notice accounts is they can be set-and-forget.

If you know you won’t get around to changing your bank when the market moves, then notice accounts can at least deliver a slightly higher rate than the easy access alternatives.

Again though, if you’re ready to look for the best deals, notice accounts aren’t likely to deliver.

Remember too that they’re variable accounts, so they’re not guaranteed to stay at high rates. When the Bank of England Bank Rate drops, most providers will soon issue their own rate cuts.

Fixed savings

• Highest fixed savings rate (one year): Close Brothers @ 4.65% AER, minimum £10,000 deposit
• Highest fixed savings rate (5 years): Close Brothers @ 4.67% AER, minimum £10,000 deposit
• Highest fixed savings rate (5 years, low minimum): ThisBank @ 4.57% AER, minimum £100 deposit

To secure the highest currently prevailing interest rates, fixed savings accounts are usually the way to go.

With these accounts you must lock away cash for a set period of time. In return, you typically earn a higher interest rate than most easy access alternatives – at the time you put your money away.

Fixed rates can vary significantly depending on long-term interest rate predictions. Right now, there’s little difference between a one-year and a five-year term. But things can change quickly.

Although I think fixed savings accounts have a place, I tend to steer clear. That’s because if I can manage without access to the cash for five years, then I can invest it in potentially more lucrative assets like shares.

However some people do like to keep several years of cash at the ready. And if you most value certainty then you will find it here.

With fixed rates it’s important to appreciate the ‘interest rate risk’ of opting for an account with a long fixed period: if rates rise in future, you won’t be able to benefit until your current term expires.

Reducing the hassle

Some of you will be reading this and thinking it sounds like a nightmare. Opening new accounts with different banks, posting copies of your ID, and remembering yet another app login.

All for only marginally higher rates here and there!

This is where intermediary platforms can provide an interesting alternative.

Hargreaves Lansdown is one such option. Alternatives include Prosper and Flagstone. I don’t have experience of the latter, but I have investments with the UK’s investment behemoth. Hence it was no extra hassle for me to open Hargreaves’ Active Savings Account product.

With Active Savings I can open, for instance, a Close Brothers one-year fixed account at 4.47% AER with just the push of a button.

Admittedly, that rate is 0.18% less than going to Close Brothers direct. But if the hassle factor has you languishing on a lowly rate at your bank, then an intermediary is a better alternative.

In this example, with £10,000 of savings I would earn £18 less (pre-tax) per year with Active Savings versus going direct. No big deal.

But if my money was sitting in a Barclays Everyday Saver paying just 1% AER, and I was planning to move it into a Barclays’ one-year fixed rate account at 3.7% AER – just because I wanted to avoid the hassle of switching provider – then you can see why an intermediary can be a more profitable option.

These services probably won’t get you the best rate. But they can get you a better than average one, and with only a few clicks.

Is a savings account a good idea with high inflation?

After the enormous price rises of recent years, the latest Government inflation figures tell us that Consumer Price Index inflation is running at 3%.

This is the first and biggest problem with cash. Even if you bagged some of the highest rates we’ve listed above, you’d be lucky to see more than a 1% return in real terms. ¹

So compared to other asset classes, you probably won’t win with cash in the long run.

However even the most aggressive investors should usually have some of their wealth in cash, whether for diversification or for maintaining an emergency fund. And it’s clearly worth getting the best rate you can on your money, for whatever level of hassle you can deal with.

The second problem with cash is taxes.

If you’re a higher-rate taxpayer, then only the first £500 of savings interest is tax-free. For everything above that, the 4% headline rate gets you just 2.4% after HMRC has had its cut.

Tax-free gilts may well be a better alternative for large sums of money, especially for higher earners.

How much of your portfolio do you currently keep in cash? Have you had any experience with savings intermediaries? We’d love to hear in the comments below. Note that we’ve updated this article with current rates and products, but kept the old comments for interest. Check the dates to be sure.

1. That is, after inflation.

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