Saving for a secure future is a smart move. Getting started can be tricky if you’re not in the habit of putting money away regularly. But it’s an important discipline because most of us don’t have enough savings to rely on today or for the longer term.
Here are four ways to help boost your savings:
Start today
Not everyone can afford to save as much as they’d like (or need) each year, but putting a little something away every month is better than doing nothing. The golden rule is: don’t delay. The earlier you start, the better your chance of enough money to provide a decent financial buffer, and further into the future, the standard of living you want in retirement. And don’t forget to increase your monthly contributions as your earnings grow.
Be tax efficient
Keeping money away from the taxman enhances returns because it means pocketing every penny of the gains. You can shelter a mixture of cash and stocks and shares up to £20,000 this tax year in an ISA, which doesn’t need to be declared on any tax return. This money is also safe from capital gains tax on profits.
A pension offers tax relief in a different way. You get relief on the money you save, so to save £100 you only need to pay in £80, if you’re a basic rate taxpayer. For higher rate taxpayers it will only cost £60. This means that your money can grow at a faster rate.
Don’t overpay for investments
Investing isn’t free. A fee is charged for running and holding your investments, which can eat into returns. Look at the charges on new or existing funds to ensure you’re not paying over the odds on management fees. You should also make sure you pick the right platform on which to hold your investments.
Different platforms charge in different ways so there’s no clear cut answer as to which is the overall best value – it all depends on how you run your investments. For example if you plan to chop and change it would be more cost effective to choose one that offers a fixed fee rather than paying ‘per trade’. Use our compare platform tools to learn more.
Review existing savings
If you have had your money in the same place for a long time it may be prudent to check that the returns are acceptable. This may mean examining funds you are already invested in, or the rate of interest you’re being paid by a bank. Rates do change and sometimes we are too busy to notice.
