Savers who are worried about depositing money with a single bank could be reassured by saving with a money market fund, according to Fidelity.
With savers recently flocking to Northern Rock branches to withdraw their savings, after it was announced the company took a Bank of England loan, many consumers are worried their savings might not be safe in the event of a bank’s collapse.
Fidelity says money market funds provide similar returns and security to cash deposits but spread investments across a range of financial institutions, to reduce the risk to savers of an institution facing financial difficulty.
Richard Wastcoat, UK managing director of Fidelity, says: “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.”
Money market funds are also covered by the Financial Services Conpensation Scheme, providing customers with peace of mind in the event that several financial institutions were to collapse.
“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”, adds Wastcoat.
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