Saving in a low interest economy

My childhood days are gone ... I no longer get £50 interest on my £500 in my savings account... but i'm not paying 17% on my mortgage either.  Even 10 years ago we withdrew the interest from our ISA to go on holiday ... but we couldn't go far on what we get these days


So what can we do to make our money work for us ... or at least give us a little return


1.  Pay off debts.  

you may well be paying 20% plus on credit cards so it's a no brainer  to pay this off ... save £200 a year on a £1000 debt

Your mortgage may be at the lowest interest rate you have ever had but you will be paying more than you can earn on the same amount of money... so it makes sense to overpay.  If you don't want to lock the money away, try an off set account where you can take the money back out as you need it


2. Lock your money away to earn a little more

Bonds or fixed term accounts will offer more interest than easy access accounts 

Regular savings accounts also offer rates a little higher than the 'norm' 


3. Take a chance

If you fancy a gamble put it in premium bonds rather than the lottery... you might win big or you might not but you can always get your capital back

The stock market is also a gamble ... invest via an stocks and shares ISA or look for shares you think may rise ... just remember you can loose your investment


4. Keep switching

We all know they offer the best rates to new savers so check your accounts every year.  you might manage to get 2% instead of 0.02%


5. Bulk up your pension

Ok this is loooong term but The government will add 20% in tax relief to anything you invest in a personal pension.  You can't get access to the money until you are 55 but as you no longer have to buy an annuity you will have access to all the capital at that point.  Bear in mind you can get this tax relief even if you do not earn any money so buying a pension for a spouse who stays home with caring responsibilities is a good option if you are in a company scheme



The bottom line is in a low interest environment you are going to need to work hard to make your money earn for you!

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