Can Investing Your Savings Make You Money Anymore?

Anyone fortunate enough to have any spare cash knows that now is not the best time to make money from savings. With the average instant access savings account giving a less than stellar 0.4% interest, it is easy to assume that any attempt to save money will always see inflation erode your capital deposit. However, for the financially savvy, there are still ways to make your money work for you.

Pay Off Any Debt

If you have any outstanding debt, it is likely that the interest rates applied to that debt outstrip any interest accruing on your savings. In other words, not paying off your debt is costing you money. Equally, if you clear the debt, you will then have more money to plough into savings.

Reduce Your Mortgage

Mortgage interest rates might be at an historic low but reducing your mortgage balance could net you thousands of pounds in interest saved. It is not always possible to pay down your mortgage without incurring early repayment charges but most providers allow you to pay off a certain proportion of the balance each year. Or, you can shop around and compare interest rates from other providers too.

Invest In An ISA

Everyone has an annual individual savings allowance (ISA). For the current tax year, it allows you to save a maximum of £20,000 tax free. You can choose a cash ISA, one that is invested in stocks and shares or, provided that your total annual investment does not exceed that £20,000 maximum, you can open one of each. A cash ISA is lower risk but also, particularly given current interest rates, may result in lower returns. A stocks and shares ISA is an investment vehicle, which you can use to invest in shares, funds, unit trusts, investment trusts, Open Ended Investment Companies (OEICS) or corporate bonds. You can run the investment yourself, using an investment platform, or you can do so through the services of a financial advisor. Although investing your ISA allowance is stocks and shares potentially offers much greater returns than a cash ISA, you also risk losing some or all of your money if the value of your investments falls or the amount you pay in charges and fees exceeds any dividends and other returns. Consequently, it is crucial that you understand what you are doing before you choose this option.

Open A High Interest Savings Account

High interest savings accounts still exist if you look hard enough. However, you often need to be able to deposit a significant sum in order to access the highest interest rates. You may also need to be willing to forgo immediate access to your money as many high interest accounts require you to give a minimum period of notice before any withdrawal.

Pensions

If your existing retirement provisions are not as healthy as you might wish, it could be worth using any savings to boost your pension fund. Most contributions qualify for tax relief. For a basic income rate tax payer, this means that for every £80 you invest, your pension fund is boosted by £100. Currently, savings are even greater for higher rate tax payers, although this may change in the near future.

Image from https://news24headlines.com/loan-rates-will-also-fall-after-interest-reduction-on-savings-accounts-report/

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