Your Money | Melanie Bien

Who said 'never a borrower be'?

Savers and investors should be happy to see the back of 2001. Those invested in shares watched in dismay as the market continued to disappoint. Those with money in savings accounts saw their returns plummet as the Bank of England repeatedly cut interest rates. Those with Equitable Life pensions watched with increasing despair as thousands of pounds were slashed from the value of their funds, leaving those nearest to retirement facing penury.

There was some good news, however. Low interest rates resulted in some of the best mortgage deals ever. A large number of people remortgaged their homes to take advantage of this, while others turned to buy-to-let, encouraged by a growing range of specialist loans and a booming rental market. What's more, as property prices steadily increased – although not at the levels we have seen in the past two years – capital appreciation made getting a foot on the property ladder ever more attractive.

So what does 2002 hold for us? Well, experts predict a recovery in the stock market, which is good news for investors, although it seems unlikely this will take place before the end of the year. In the meantime, it is probably worth drip-feeding your money into an individual savings account to give you broad exposure to the market. After all, a recovery will mean an increase in share prices, so it makes sense to pick up a few while they are cheaper.

The housing market is also expected to hold its value next year. There has been a slight slowdown in the number of viewings per property but, on the whole, values remain steady. Sharp increases in property prices are unlikely – that has already happened – but realistically priced properties should continue to sell. Mortgage rates are already beginning to climb, with Nationwide increasing its fixed rates last week – so move quickly if you are thinking of buying a property or remortgaging.

As far as pensions are concerned, the Government's consultation on annuities should be published by the end of this month and will be up for debate at the beginning of next year. The best solution seems to be not abolition but a tweaking of the rules, allowing people to guarantee a basic support level with an annuity and then do what they like with any funds above that.

As for Equitable Life, the result of the compromise vote will be announced next month, giving a clearer idea as to the future of the insurer. Let's hope that a compromise is reached: there is precious little alternative.

All we know for sure is that 2002 is bound to be full of surprises that will affect our personal finances – all of which we will follow in these pages. Until then, I would like to wish all of you a very happy Christmas and a prosperous new year.

m.bien@independent.co.uk