Consumers were urged last week to ditch old-fashioned savings accounts and opt for a better home for their cash, as rates continue to plummet and a growing number of providers introduce hidden traps.

Decent interest on cash accounts might be almost extinct, but double-digit returns can still be achieved if you look elsewhere.

“Not that long ago, cash was often king,” said Andy Cowan at adviser Towry Law, “but 3.5% has been lopped off official interest rates in just four months and savers looking for low-risk are in crisis.

“However, it’s not all doom and gloom — there are some great opportunities, although a mix of assets with varying degrees of risk is probably best.”

Here, we look at potential homes for your cash, that can yield up to 13% a year, from the lowest to highest-risk.

UK GILTS

Gilts are bonds issued by the government when it needs to borrow money. Yields have been dropping, as inflation and interest rates fall and investors clamour for the safety of government-backed stock.

Two-year UK gilts were yielding less than 1% last week, but yields on long-dated stock have been far steadier, and you can get 3.65% if you lock in for 10 years and 4.41% for 20 years.

A better bet might be index-linked gilts. These allow investors to hedge against inflation. As measured by the Retail Prices Index, inflation fell to 0.9% in December from 3% in November, but could rise if the government puts its “quantitative easing” plan into action — that is, printing money.

Alex Hoctor-Duncan at fund manager Black Rock said short-dated index-linked gilts were priced to expect inflation below 0.5% in the next five years and sub-1.5% over the next 10, so investors would “profit handsomely” if it turned out to be higher. Index-linked 2013 and 2016 stock is yielding 2.5%.

Among funds, Darius McDermott at broker Chelsea Financial Services likes the City Financial Strategic Gilt fund. Its largest holdings include index-linked 2013 and 2016 stock.

The fund is up 9.7% in the past year, and is yielding 3.41%, according to Trustnet, the financial-data firm.

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