Are you maximising your saving and investment opportunities?
Many of us have saving goals that we’re trying to achieve. Whether it’s for a house deposit, that dream holiday, or retirement, it’s always nice to have a nest egg sitting in the bank. You might’ve already made changes to help maximise your savings, such as buying non-branded grocery items and swapping the gym membership for exercising at home. But, where your money sits, and how it grows, is another way to make sure that you’re getting the most out of your money.
It’s a good idea to pay off any outstanding debts (overdraft, credit cards etc.) before starting to save. Once you’ve done this, consider the following to maximise your saving and investment opportunities and see your pounds stretch further.
Your current account is the place you store and manage your day-to-day money. You might’ve decided on this account because your parents bank with these, or because it’s a branch that’s local to you. However, a common misconception is that all current accounts are the same.
In reality, there might be a current account more tailored to you and your needs. These factors may include an interest free overdraft, or a higher amount of interest paid on your credit balance. You also may get a reward for switching — this might be a cash incentive, higher interest for a fixed period or a small monthly credit.
It’s certainly worth switching your current account if you find a service better suited to you. The bank that you’re transferring to will sort out the switch and you won’t need to contact your old bank. Under the Current Account Switch Service, it takes seven working days to switch your account.
It’s a good idea to keep your regular savings separate to your current account. This way, you’re less tempted to spend it and it doesn’t get confused with the funds you’re allowing yourself to spend if you’re budgeting.
It all depends on your saving goal as to where your money should sit. For example, if your goal is short term, then a Cash ISA may be what you need. If you goal is long term then a Stocks & Shares ISA could be more appropriate.
In the current 2018/19 tax year you have an ISA limit of £20,000. This means that you can save up to this amount without being taxed on it. Make sure you look into the different type of ISAs available to determine which will be best suited for you. If you want savings that you can access easily, perhaps these are short-term saving goals, then an easy-access saver could be the best for you.
In fact, some bank accounts in-credit rates are higher than easy-access saving accounts and ISAs so explore this route too.
As mentioned, you have a £20,000 tax-free ISA allowance, and you may be able to make the most of this with investments. Of course, investing comes with a risk and this is something that you must bear in mind before you go down this route.
A Stocks & Shares ISA can bring you higher returns than cash savings and Cash ISA accounts. You can usually design your own investment portfolio, outlining how much you want to invest each month and which growth rate you want to opt for (the higher the growth rate, the higher the risk). Keep track of your portfolio online to see how your funds are performing.
It may be a long time away but saving for your pension is always a good idea. You might already be contributing to your employer pension scheme but having a Personal Pension could be something to consider too.
A Personal Pension scheme is an investment that you contribute to throughout your working life so that you have more savings when you come to retire. You cannot use this as a regular savings account however as there are tax-rules, Government contributions and Pension restrictions that determine the age you need to be to cash in.