Stress Free Savings
Most people are aware that the Bank of England base interest is at a historically low level, in fact, it’s been at that level for well over a year now and looks set to stay there for at least another six months. You may also be aware that the rate of inflation is quite high at the moment, and it is something of a cause for concern.
The reason it’s worrying is that when inflation is higher than the interest rate, money in savings accounts becomes worth a little bit less every month. The fractions are relatively small, but it can make a difference.
The question is, then, how do you make the most out of your spare cash?
The first thing that you can do with your savings is invest them in a savings account. Most savings accounts aren’t offering much more than 0.5% at the moment, this is not a particularly good rate of interest and you can easily do better without too much extra hassle.
The next option is to put your money away in a cash ISA. Generally speaking this is a very good idea, whilst cash ISAs aren’t offering particularly good rates at present the interest they do earn is tax-free, and when the Bank raises its base rate, the more money you have stored away in ISAs, the better return you will get by having more savings protected from tax.
You are, however, only allowed to have one ISA, changing isn’t particularly complex, but you don’t need to worry about that now, most ISAs are offering broadly similar rates, so the important thing is making the most of your allowance, rather than finding the best rate.
The option that offers best return for your savings is a stocks and shares ISAs. Stocks and shares ISAs are based on the stock market and therefore can offer excellent returns, but they can also be quite nerve-wracking if the market is volatile (and right now it is). On the one hand stocks and shares ISAs are just about the only way of beating the inflation rate, but on the other, they’re stressful. When the stock market settles down (and that could be months) it’s worth considering such a product, but for the moment, probably best to steer clear.
The final, and best, option for any spare income that you do have is to invest it in paying off your mortgage, as the interest rate is low, the money you do put into your mortgage will return you more equity than ever before, so it’s definitely worth it.
If you want more details on some of the option entailed above, it’s good to go down and visit your bank, and most will have someone who can offer you good financial advice in general and in relation to the products on offer. If you’re looking for a good place for your savings, Santander are offering market-leading deals at the moment, so they may be a good place to go to start your search.
