Credit Crunch Winners

Cheer up everybody, things aren't really that bad, are they? True, the credit crunch is dismal for some, but it doesn't spell financial disaster for everybody.

Just as the last decade of soaring economic growth created its fair share of losers (first-time buyers, credit card junkies.), so today's over-hyped woes are producing a small crop of winners.

If you're filling up your tank, feeding your family, staring in horror at your gas bill or trying to sell your house, you might want to give me a good hard kick for saying this. But believe me, there is some good news out there, although admittedly, not for everybody.

Saving grace.

First, if you're a saver, the current insecurity in the banking sector is working in your favour.

The banks are desperate to bolster their balance sheets by sucking in money from the dwindling band of Britons with cash to stow away, and have been offering a rash of fixed-rate bonds paying more than 7%. That's 2% above Bank of England base rate.

This spells good news for pensioners who depend on the interest from their savings.

But with swap rates now falling, the good times may not last forever. Two of the top-paying one-year bonds, 7.17% from Birmingham Midshires' 7.17% and 7.15% from Bank of Cyprus have just been pulled, and others could follow. So don't hang around.

Crunchy numbers.

And here comes another batch of winners. If you're heading for retirement, now is a better time to buy your annuity than any in the last six years.

The credit crunch has pushed up annuity rates by a healthy 12%, according to Annuity Direct. That's because the current economic trauma has boosted yields on bonds, which underpin most annuity funds.

But again, you have to act fast if you want to profit. When bond yields fall, they will take annuity rates with them.

So savers and annuity seekers are cashing in on the crunch. Is that the best I can do?

Cheap and cheerless.

Well, there are several ways you could benefit, if you have a little spare cash and patience.

It may not have passed your notice that the FTSE 100 has tumbled from a peak of nearly 6700 last year to around 5300 today, a drop of 20%. It is an odd fact of investor psychology that fewer people want to buy something that has been discounted by 20%, but you are certainly getting better value than just a few months ago.

My guess is that markets have a fair bit further to fall (there isn't that much good news around), but in a few months it might be time to start drip-feeding cash into equities, to pick up shares at attractive prices.

By investing little and often, you will also benefit from our old friend pound-cost averaging. When markets finally revive, your only regret will be that you didn't have the courage to invest more when shares were cheap.

Remember March 2003, when the FTSE 100 hovered briefly around 3300? I meekly popped just £500 in an exchange traded fund (ETF) tracking the index, and have been regretting my caution ever since.

Although, who knows, I may get a second chance. I won't fluff it this time.

Going down.

You might also cash in from doing some bottom fishing in the property market. Again, we probably haven't reached the floor yet, Axa has just predicted that "Middle Britain" houseowners could see a further £40,000 wiped off their values this year.

But at some point, all those would-be first-time buyers who were squeezed out of the market by the house price bonanza of the past decade might soon find they can afford a home of their own after all (perhaps with a bit of financial aid from their parents).

And with Halifax and Nationwide recently announcing cuts in their mortgage rates, they might even be able to get an affordable home loan. Particularly if they have a deposit of 10% or more pampering itself in a high-interest savings account.

Gruelling times.

I don't mean to belittle the many serious problems people are facing right now. If you're maxed out on your credit card, on the brink of negative equity or trembling at the thought of your next utility bill, you have my sympathy.

And if your retirement income is struggling to keep pace with soaring Council Tax, food and utility bills, well, I wish I could give you more comfort.

But the credit crunch has also seen some much-needed re-balancing between winners and losers. Savers are up, borrowers are down. Homeowners are losing, first-time buyers are winning. Thrift is in, consumption is out. The excesses of the boom are being systematically punished (although sadly, the innocent seem to be suffering more than the guilty).

I know, it's thin gruel, but that's all the comfort food we have to offer these days.

Anyway, back to the bad news.

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