The online easy-access savings account from Marcus has one of the best interest rates of any savings account on the market right now. The big question is, is it still worth taking out a Marcus savings account or are there better options elsewhere?
When Marcus, which is backed by Wall Street giant Goldman Sachs, first offered its savings account to the UK, it provided a rate of 1.5% AER. That includes a basic rate of 1.35% and a fixed bonus of 0.15% for 12 months. After a year on the market, Marcus has now cut its bonus rate to 0.10%, meaning savers can now only get 1.45%.
This rate drops to 1.35% after 12 months, although you can renew your bonus with the provider by logging into your account and finding the ‘Renew you bonus‘ link.
Following the bonus rate reduction, the Marcus account no longer offers the best interest rate on the market.
The Coventry BS Triple Access Saver pays 1.46% AER variable, 0.01% more than its peer. Although, if you only have a few hundred or thousand pounds to save, TSB’s Classic Plus account, which offers 3% variable interest on up to £1,500, is undoubtedly a better offer. And if you’re willing to lock your money away for a year, some providers offer an interest rate of up to 1.75%.
If this isn’t enough, then I highly recommend looking at the stock market.
Investing in stocks is a great way to boost your income stream with dividends if you already have a substantial cash cushion.
For example, the FTSE 100, the UK’s leading blue-chip stock index, currently supports an average dividend yield of 4.5%. You can get access to this income with a simple passive tracker fund which does all of the hard work of investing in the index for you. All you need to do is sit back and watch the money roll in.
Another option could be Vanguard’s FTSE UK Equity Income Index Fund. This fund tracks the performance of the UK Equity Income benchmark. At the time of writing, this offering supports a dividend yield of 5.4%.
The annual management fee charged by Vanguard to manage the portfolio on your behalf is just 0.14%, making it one of the lowest cost equity income fund offerings on the market today.
When combined with a high-interest savings account such as Marcus’ easy access offering, an investment in the stock market can boost the rate of income you receive from your savings without having to take on too much risk.
Boost your returns
I calculate that a £10,000 savings pot split equally between a Marcus savings account and Vanguard’s UK Equity Income passive tracker fund, would generate £340.50 of income every year, more than double the £145 in interest income a saver would receive from the Marcus account alone.
Overall, considering all of the other options on the market, yes, it’s still wise is to hold money in a Marcus savings account right now. However, if you’re looking to substantially increase the level of income you receive on your savings, I highly recommend investing some of it in the stock market.
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Rupert Hargreaves owns the FTSE UK Equity Income Index Fund. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.