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Cash interest explained |
You will receive interest on balances in your platform cash account at the prevailing rate.
Embark Investment Services Limited acts as the custodian for investments on the Willis Owen platform and is one of our strategic partners that provides our Willis Owen ISA, GIA, Junior ISA and SIPP.
Embark places cash with a number of banking partners for safekeeping and to provide the potential for you to earn interest on money in your platform cash account. By managing cash in this way, it aims to provide better protection and a higher overall level of interest than if all funds were placed with a single bank.
The rates of interest paid by banks will vary. Embark retains a portion of the interest earned to cover its costs in managing platform cash.
Current Interest Rate
The table below shows the current customer interest rate payable on cash balances along with the amount of interest retained by Embark. The customer interest rate shown is that after accounting for interest retained by Embark:
| Date From | Customer Interest Rate | Interest retained by Embark |
|---|---|---|
| 25th March 2024 | 2.46% | 1.75% - 2.00% |
Embark can change the rate of interest at any time and it reviews the position at least quarterly. Interest is calculated and accrued daily and is credited to your account on the first of each month. If you transfer out, accrued interest is applied at the point of transfer. We will inform you if and when the interest rate changes as soon as is practicable.
Interest retained
The table below shows the yearly equivalent rates of interest Embark expects to pay based on a range of possible yearly interest rates it may earn.
| Interest Embark expects to earn | Customer Interest Rate | Interest retained by Embark |
|---|---|---|
| 0-1% | 0 – 0.46% | 0 – 0.54% |
| 1-2% | 0.46% – 0.94% | 0.54% – 1.06% |
| 2-3% | 0.94% – 1.46% | 1.06% – 1.54% |
| 3-4% | 1.46% – 2.02% | 1.54% – 1.98% |
| 4-5% | 2.02% – 2.61% | 1.98% – 2.39% |
| 5%+ | 2.61%+ | 2.39%+ |
Historic Interest Rates
To see details of historic customer interest rates, along with the amount of interest retained by Embark, click here.
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Many British people have, for decades, been somewhat obsessed with comparing their property with their pension, or pitting their buy-to-let place against their stock market returns. It makes for a rich vein of dinner-party conversation but is otherwise a difficult comparison to make.
The different types of assets – shares or bricks and mortar – have very different qualities and performance records, and the differences between the two approaches have become even starker in recent years.
Yes, owning your own home makes a lot of sense when compared to renting all your life and paying off someone else’s mortgage. But with house price inflation far surpassing wage growth and huge deposits required, home ownership is often out of reach for many people. This is why the age of an average first-time buyer is creeping upwards. It is now 33.8 in London and 32.1 outside the capital, while the average deposit size is now £61,000.
All that said, the criteria for purchasing a property to call home are very different to those for buying a property as an investment. Before you decide either way, we wanted to walk through some of the considerations.
Rather than your own needs, which might include transport links, proximity to work, friends or family, perhaps a bustling nightlife or having the countryside on your doorstep, for those renting out somewhere, the desirable qualities will be far less personal.
If renting to families, perhaps a common commuter belt or being near good schools and nice outside spaces might come into play, while renting to students will require a different set of ‘must have’ features.
For those thinking about investing to make money, it probably makes sense to start by looking at performance. Obviously rental properties will differ hugely depending on their location, value, amenities, and market demand. Therefore, we need to make some generalisations for the sake of this article.
If we look at returns over 10, 20 and 30 years, comparing the average UK property price with the FTSE All-Share Index*:
| Timeframe to November 2023 | Average Property Price Increase | UK All-Share Price Returns | UK All-Share Total Returns |
|---|---|---|---|
| 30 years | 427.43% | 160.45% | 631.03% |
| 20 years | 109.27% | 88.84% | 283.43% |
| 10 years | 60.11% | 14.24% | 63.84% |
As you can see from the above table, on basic price returns, property prices have surpassed the growth in the FTSE All-Share over three time periods, but with reinvested dividends – the fourth column – comparative growth numbers are generally far superior.
Also, remember that timing matters. You need to factor in what was going on during particular timeframes whenever comparing different assets.
While performance is often the starting point, it does not paint the whole picture. As we often say, past performance is not a reliable indicator of future results. The investment returns we just looked at didn’t factor in any costs of investing in either property or shares. You’ll need to consider trading, fund management or platform charges on any investments.
Meanwhile owning a property – whether as an investment or a home – requires a lot of outlay. Some of these costs will be one-off upfront fees, such as a deposit, stamp duty and other taxes, and legal fees. Other costs will be ongoing, such as mortgage payments, insurance premiums and maintenance.
One of the attractions of property is that it is a physical asset that you can see and feel, unlike shares which these days are just a line of text in your online account. However, that physical presence comes at a cost. You can’t change the location of a property, or sell just a part of it, or indeed sell all of it whenever you feel like it.
Shares and funds have different liquidity characteristics – that means some are more easily sold than others – but in general terms, it tends to only take a few days to get your money back, and you can sell just a part of your holding and retain some.
A commonly held view is that investing in property is less risky than investing in shares. This is hard to really quantify, as shares are traded daily with prices updated every second. This means they might look more volatile than properties, which are valued less frequently – only ever really if someone is buying or selling a property, or applying for a mortgage.
But risks apply in both cases. Share prices can rise and become overvalued and there is a risk that a company might collapse, meaning you get back less than you first invested. Property, on the other hand might see you having to put thousands of pounds into repairs and property prices can also fall, which might influence if or when someone can sell, or the amount of money to be made. In both cases the risks can be managed and reduced, but never removed entirely.
Overall, it is a personal preference what you choose to invest in. Whether buying a home, buying a rental property, or investing in the stock market, we’d urge you to consider all these factors carefully before opting for one route or the other.
*Sources: Property data sourced from: Land Registry / Data supplied by Morningstar. Figures based on the annualised rate of return of the FTSE All-Share index commencing 01/12/1993 (30 years), 01/12/2003 (20 years) and 01/12/2013 (10 years) respectively. Ending 30/11/2023. FTSE All-Share Price Returns are presented net of dividends reinvested. FTSE All-Share total returns are presented inclusive of dividends reinvested. The data used is before commissions, costs or other charges; which would reduce real world returns.
