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Guide To Saving Investments
If you’ve ever taken a moment to look into savings and investments, you’ll know that it can be jungle out there. Where once savings just meant putting money in a separate account away from your main account, today you have a myriad of options from ISAs and savings certificates to premium bonds and shares. This section gives you overview of the savings and investments you may be interested in.
Before you start looking to financial services companies for savings products and investment options, you should first consider what your situation is and why you want to save. For example if you have debts it may be more cost effective to pay off your debt than to start saving, i.e. if you are paying 16% on your debt and your savings will only pay 5% then think about paying off your debt first. Taking some time to think about what and why you want to save money will help you to see what direction you should take along savings and investments road.
The first thing you need to know is the difference between savings and investments. The main difference is that savings are guaranteed, i.e if you put your money in you will definitely get it back, hopefully with some interest, while investments are not guaranteed and so whatever you invest you may not get it all back. On the whole savings are for the short term while investments are for the long term, i.e. five years or more.
The choices you have when it comes to savings and investments include:
Easy access savings accounts – These are offered by banks and building societies around the UK, as well as by online financial services companies. They are easy to open and run, and you can access your money whenever you need to with no notice period.
ISAs – ISA stands for Individual Savings Account and these are tax-free savings accounts that allow people to invest money either as cash or into stocks and shares. A Maxi ISA allows you to invest in both these elements in one account and a Mini ISA restricts you to one of these options. A cash ISA is basically a cash mini ISA, i.e. andaccount that allows you to save a certain amount without having to pay tax on your interest.
Bonds – The answer to ‘what are bonds?’ is quite complex, but put simply bonds are debts that can be issued by companies or governments who guarantee payment of the original investment plus interest by a specified future date. Some bonds require you to commit your money for a particular period i.e. 5 years, others like premium bonds have other conditions, for example you are not guaranteed interest but you have the chance to win up to £1 million every month.
Unit Trusts – These are a way to invest your money on the stock market, by pooling it with other investors while an investment expert invests the money in a portfolio of companies to spread the risk.
Shares – Usually bought through a stockbroker, shares allow you to own a little piece of a company along with all the other share holders. Shares are traded on the stock market and the stock market price of shares can go up or down. Using your stockbroker or financial adviser you can sell shares or buy shares whenever you like, but generally you should consider investing your money for a significant period of time.
For more information about savings and investments why not use our directory to find financial services near you.
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