Almost 17 million Brits have less than £100 stashed away in savings, according to This is Money. For a lot of us, it’s getting started with saving up and sticking to it, as opposed to having no money to save. It does also depend on where you are in life – a huge 3.5 million of us have no assets and little to no savings. Even if you are one of the 3.5 million, you might experience an unexpected windfall in cash whether it’s from prize money or an inherited sum. No matter whether you’re just starting out on the road to saving or you have a significant amount of cash, here are some of the best options for your savings.
Bank and building society savings
Ideal for short-term savings and long-term savings, banks and building society savings accounts give easy access to your savings and are great for saving up for holidays, Christmas, birthdays and the deposit for a mortgage. Interest rates are usually pretty good, but vary bank to bank (from 2.5% to a huge 5% per annum). If you fancy a change from your regular bank, you can nip down to your local Post Office and open up a National Savings and Investment account.
Individual Savings Account (ISA)
You’ve most probably heard of an ISA – a tax-free place to keep your savings. At the moment, the tax-free allowance is £15,240 but it’s set to increase to £20,000 after April this year! Almost anyone can get an ISA – as long as you’re over 16 and a UK resident. Junior ISAs are also available for anyone under 18. An ISA is better for mid or long-term savings of a year or more to get the full advantage out of it. It’s not one for those of you who fancy a high-interest rate – ISAs have an interest rate varying anywhere between 0.8% and 1.65%.
First-time buyer? You’ve probably heard of a regular Individual Savings Account (ISA), which is open to people from all walks of life. But the Lifetime ISA is a new initiative for savers aged under 40 looking to get onto the property ladder or build up retirement savings. The government will give you £1 for every £4 saved, up to £1000 per tax year. But there’s just one catch – if you withdraw the money before you turn 60 and you don’t use it for your first home, you’ll have to pay a 5% penalty and pay back the government bonus and interest earned on the bonus. This is a great opportunity for first-time buyers, but one to avoid for short-term savers.
Personal Savings Allowance
Those of you looking to save in the long-term should look for a high-interest rate for your savings. The Personal Savings Allowance (PSA) launched last year is perfect for regular taxpayers to start saving aside a small nest egg. You can earn up to £1,000 tax-free interest and it really does add up no matter whether you’re saving long-term or short-term.
Did you know? You can invest your savings in peer-to-peer lending companies. It’s called an Innovative Finance ISA and can reap fantastic interest rates, but also comes with a risk of losing your money. It’s a novel way to keep your savings locked away, but it’s probably not one for the faint-hearted.
Credit unions are one of the best options for your savings if you can only afford a small amount per month. It’s a fantastic first step for those of you who haven’t saved properly before. They’re run by cooperatives made up of local people, so there’s a real individual community spirit around saving. Find your local Credit Union here!
Stocks and shares
Stock markets are, of course, very risky but it can give you huge rewards if you’re feeling daring. Some people use it as a long-term savings tool. Your money isn’t as accessible so it isn’t great for people who want to use their savings as an emergency fund. But if you feel stocks and shares are the way to go for your savings, then you’ll want to take a look at the FTSE100 (a list of the UK’s top 100 companies) and buy shares. The company uses your share as an investment and, if it does well, you’ll get generous profits.
Hiding it under your mattress
Under the mattress, in the freezer, in fake baked beans can – some people really do stash their cash at home. But it’s highly prone to theft, fire, water damage and a lot more. So don’t literally sleep on your money – start taking advantage of savings accounts and investments!