Saving money means putting it in a savings account, right? Well, not anymore. It seems that times have changed, and the traditional savings account is no longer the go-to place to store your hard-earned cash – these days, people have other ideas.
TopCashback has taken a closer look at the issue to find out where people stash their savings, and found that many are shunning traditional savings accounts in favour of higher interest alternatives. Current accounts are leading the way with 57% of those surveyed choosing this option, and although 52% still keep cash in a savings account, the share is clearly dwindling.
ISAs are gathering pace with 47% saving in one of these tax-efficient vehicles, while 12% of those surveyed save in stocks & shares. At the bottom of the list are investment funds, with just 5% saving in this way, while bonds are only slightly more popular with 7% using this method.
The figures aren't that surprising, particularly with interest rates on savings accounts at an all-time low. Those seeking real returns on their cash are understandably considering the alternatives, and with several current accounts now paying impressive rates of interest (up to 5% in many cases) it's no wonder they're attracting attention.
The tax-efficient nature of ISAs is also proving popular, as any returns you get are kept out of the taxman's reach. Of course, rates are still low, but if you're willing to lock your money away, you could well achieve an inflation-beating rate to get a real return from your cash. And, with the ISA limit having recently been raised to £15,000, it'll be interesting to see if these accounts take even more of the market share…
The fact that investment funds, bonds, and stocks & shares are the least popular also doesn't come as much of a surprise, particularly as these forms of saving are often viewed as higher-risk and more complex than others. And with good reason – there's a lot more to think about with stocks & shares and investment funds and there's no guarantee of generating returns, or even keeping your initial investment, which could easily explain some people's reluctance.
However, when approached with the necessary amount of caution and the right risk appetite, they can be incredibly beneficial and have the potential to offer far better returns than other options. Interestingly, the study found that men are more than twice as likely to put their savings in stocks & shares as women, perhaps indicating a higher risk appetite in this gender.
But, no matter how you choose to go about it, it's all about finding the savings product that will suit your needs, lifestyle and financial expectations. There are plenty of options available, and whether you want to play it safe with ISAs and savings accounts, seek higher returns from current accounts, or want to dabble in stocks & shares, you need to find the products that can make your money work harder.
See what all the fuss is about with high-interest current accounts
Get an inflation-beating ISA
Compare savings rates to get the best deal
Find out more about stocks & shares saving
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.
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