Do you have any debt?
Before you start to save it is important that you pay off any debts that you may have as it is much more beneficial for you to pay off debt instead of saving because of the big difference in interest rates.
Save or invest?
There is a important difference between saving and investing and if you do not understand it you may lose out on money or be disappointed with your return. Saving involves putting your money into a bank account which is completely safe, and you are rewarded with interest on your money in return. On the other hand, Investing involves putting your money into a business, in which you can expect to see higher interest rates in return, but the risk on the return is higher than a savings account.
It is up to you which one you decide to go through with, depending on your personal circumstances and your risk/return preferences. Overall investing usually outperforms savings but of course there is always the risk in investing that you may not get your money back.
If you are wanting to put your money into investing I would recommend some prior research into the stock you are want to invest in. Factors such as past share prices, publicly available information from public accounts, management changes, growth opportunities, and new product releases, all influence the share price of a stock. It is important that you get the timing right for http://yourmoneysite.com/wp-admin/post.php?post=110&action=edit#category-addwhen you want to buy your shares, as well as when you wish to sell your shares.
If you are not willing to take on the risk associated with investing and would prefer to put your money in savings, then please continue reading.
Where to put your savings?
There is a range of different savings accounts available and each has different rules on how much you can put in and when. To ensure that you are making the most out of your money it is important to know which accounts to fill up first. Generally, the order of savings accounts which you should fill up first is as follows: lifetime ISA, bank account savings, regular savings, fixed rate cash ISA’s, cash ISA’s easy access, fixed rate savings, normal savings.
Quick tips to saving accounts:
Before you invest your money into saving accounts, it is useful to know these 5 relevant tips.
- If you are a basic rate tax payer and earn under 1,000 interest you do not have to pay tax on your savings interest.
- Put savings in the name of the lower-rate taxpayer
- If your money is in a UK-regulated bank or building society it is protected under the Financial Services Compensation Scheme (FSCS), which ensure “The first £85,000 per person, per financial institution is guaranteed.”
- Under 16’s can earn more from better rates, but it is important to check your banks limits if you are planning on saving in their name.
- Switch your account after you have received the 12 month teaser rate which will after drop to near zero