Save smart - Savings - News - Moneyfacts

News

Save smart

Save smart

Category: Savings

Updated: 22/04/2014
First Published: 22/04/2014

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

The importance of getting into the savings habit should never be underestimated. Not only will putting money aside on a regular basis mean you're able to build a valuable nest egg for the future, but you'll want an emergency fund too – ideally around 3 months' worth of income saved for life's little emergencies. It should be a core part of money management, but to really make the most of it, it's all about saving smart.

Setting up an ISA should be high on the list of priorities, but unfortunately just 38% of respondents to a Standard Life survey are actively planning to invest in a cash ISA this tax year. The figure is even smaller when it comes to stocks and shares ISAs, with a mere 9% planning to invest.

There's clear room for improvement, and considering that ISAs pay interest entirely tax-free, there's no reason not to consider putting at least some of your hard-earned cash into this kind of account. It could be even more fruitful when the ISA allowance rises to £15,000 in July – it's one of the best ways to save truly smart, and you don't even need to stick to cash.

Opting for a stocks and shares ISA could be a great alternative for those with a longer-term savings view and a bigger appetite for risk, as this type of account gives the potential for even better returns while again offering those returns completely free from tax.

However, it's important to bear in mind that the best rates for cash ISAs will usually be offered to those that make a lump sum fixed investment, and similarly you'll need to lock your money away for a few years to really benefit from stocks and shares versions too.

That means you might want to consider the likes of regular savings accounts or even high-interest current accounts if you want to save little and often, and an easy access account will be ideal for an emergency fund.

Regular savings accounts will often provide highly competitive rates of interest, such as the 12 Month Regular Saver from Saffron Building Society which offers 4%, and high interest current accounts can offer even more. Take the TSB Classic Plus account, for example – offering 5% on in-credit balances up to £2,000, it could be a great home for your money.

Often a combination of different options will be the best way to save smart, ensuring you can get the best of all worlds – tax-free interest, easy access to your cash and great rates. Make sure to compare the options so you can build up your savings pot with ease.

What Next?

Compare the best savings rates with our best buys

Looking for a tax-efficient investment opportunity for your 2014/15 ISA Allowance?

Compare the best high interest bank accounts

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

Related Articles

Savings being used as a festive financial buffer

Good news from RCI Bank UK – its latest research shows that many of us are saving more than we were a year ago, but the question is, will you be dipping into that buffer to cover the cost of Christmas?

6 of the best easy access savings accounts

Easy-access savings accounts are as simple as they sound – they allow you to access your money whenever you need it, without having to give advance notice, and they also allow you to pay into them at any time. Here are six of the best.

Start saving for Christmas… 2017!

Christmas is just around the corner and our annual festive splurging is starting to step up, but are you prepared? It may be too late to start saving for this year’s festive spend, but it’s never too early to start for next year’s!
 
Close