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We're often told of the importance of saving, be it to build a nest egg for the future or an all-important emergency fund, yet unfortunately, the message doesn't always get through. Indeed, research from Zurich UK shows that just 47% of those surveyed have money in a savings account, and 17% have no savings or investment whatsoever.
Many are particularly unprepared for the future, with 26% of those yet to retire failing to have a private or workplace pension, and 8% believing that the State Pension will provide them with enough to live on – which means they could face a dramatic income shortfall in later life.
However, the research went on to reveal that those who set tangible goals for later life are more likely to save – those who have such goals put 7.25% of their salary into their pension, compared with 5.36% among those who don't have the same kind of aspirations, as discussed here – so it could be worth thinking carefully about what you want in retirement.
It's also important to think about where, and how, you want to save. The figures show that 18% keep their savings entirely in cash, while 45% keep it in a current account – something that could be particularly lucrative if they opted for a high interest current account – and another 47% hold it in a savings account.
A further 38% opted for ISAs, either cash versions or stocks & shares alternatives. The latter could be particularly suitable for those who want the potential of securing better returns, but should only be considered by those who are comfortable with the extra element of risk, as we discuss in our stocks & shares ISA guide. However, don't overlook the former, either – there's a slight glimmer of hope in the cash ISA sector at present, so now could be a great time to compare the options.
Other popular options included investing in National Savings (NS) bonds or certificates, chosen by 13% of respondents, while 6% opted to save with NS&I. However, others opted for more riskier methods of saving, turning away from cash entirely: 11% have direct investments in stocks and/or bonds, while 4% have alternative investments in things like private equity, hedge funds or real estate.
While these types of investment can prove profitable, they also come with high levels of risk, so should only ever be considered by those who are happy with that and who seek sound financial advice first. For the rest of us, it all comes down to finding the right savings account to meet our needs, as well as making absolutely certain that we're saving for the future, too. Start the process by comparing the top savings accounts, and find out more about auto-enrolment and how it could help you prepare for later life.
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