When you start to accumulate a decent amount of savings, you might start to wonder about the best place to invest it. If you don’t have any plans to spend your money in the near future, it could be earning even more money elsewhere. The novice will often struggle to know the best place to put savings, but with a little bit of basic knowledge behind you, the journey to making more money from your savings will become a lot easier.
- Regular savings account
A regular savings account is a great place to start saving your money, and if you only have a few hundred pounds or you would like to start saving by putting some cash away each month, this option is ideal. You can normally open a savings account very quickly with the bank that you have a current account with, so it won’t take very long at all to set this up. Regular savings accounts will pay around 1% interest at best, so you can’t expect to earn very much from it. However, it’s a safe place to put your money while you let it build up even further.
- Cash ISA
UK residents aged at least 16 years can get a cash ISA, and up to £15,240 can be deposited into the account each year (as of 2015). The great thing about an ISA is that you don’t have to pay tax on the interest which is earned from your savings. However, if you have more than £15,240 in savings, you won’t be able to put it all into an ISA. This means that you’ll have to wait until the tax year before deposited another lot of cash, or you can put the rest of it into a regular savings account. ISAs will normally pay slightly higher interest, and there are various different accounts that you can get. For example, an Instant Access ISA will pay you a lower rate of interest, but allows you access to the money whenever you need it.
- Premium bonds
Premium bonds are used by around half of the people in the UK, and that’s because they’re very safe. You can save your money while having the chance of winning various different amounts of cash – as much as £1 million, and it will be totally tax-free. However, your money is very safe, and unlike stocks and shares, you can’t lose it, so it’s a very low-risk way of investing your money. On the other hand, many financial experts have discovered that you’re more likely to earn more in interest by just having a regular savings account or ISA.