At a glance

  • Getting into the habit of setting money aside on a regular basis can give you the basis for a lifetime of financial resilience
  • Interest rates may be low, but the range of savings accounts and products available means it’s worth shopping around for the best options
  • The suitable blend of savings and investments will depend on a number of different factors, including your goals, circumstances and appetite for risk
  • The growing number of savings apps and online tools on offer can help you to manage your money and maximise your savings

At a glance

  • Getting into the habit of setting money aside on a regular basis can give you the basis for a lifetime of financial resilience
  • Interest rates may be low, but the range of savings accounts and products available means it’s worth shopping around for the best options
  • The suitable blend of savings and investments will depend on a number of different factors, including your goals, circumstances and appetite for risk
  • The growing number of savings apps and online tools on offer can help you to manage your money and maximise your savings

At a glance

  • Getting into the habit of setting money aside on a regular basis can give you the basis for a lifetime of financial resilience
  • Interest rates may be low, but the range of savings accounts and products available means it’s worth shopping around for the best options
  • The suitable blend of savings and investments will depend on a number of different factors, including your goals, circumstances and appetite for risk
  • The growing number of savings apps and online tools on offer can help you to manage your money and maximise your savings

Getting the best out of your money starts with saving it. Whether you’re a teenager saving up for new trainers, a young adult building a mortgage deposit, a parent creating a fund for their kids, or your priority is to retire in comfort, it’s vital to make your money work as hard as it can. But what does that mean?

Setting goals

It begins with knowing what you want from your savings, so you can ensure that you’re taking the most effective approach. It’s likely that you’ll have started with a simple savings account, but over time you might also use different forms of cash savings as well as stock market-based investments such as shares and funds.

Each type of investment, or asset class, has its own role to play. Much will depend on your goals, some of which will be relatively immediate, such as saving for a holiday, and others that will be more long term, such as building a pension pot. But it’s important to remember that different savings products act in different ways.

For example, cash accounts are ideal for rainy-day savings because they can be accessed either immediately or at short notice. However, the interest rates can be very modest, which means the value of your savings can be eroded over time by the effects of inflation. That’s why stock market-based investments can sometimes be more effective when saving for goals that are at least five years away. But while they typically provide better returns over the long run, there is more risk involved.

Goals: from rainy days to retirement

A holiday

This is likely to be a short-term goal, so locking your money away probably isn’t a good option. The main option is a cash savings account with a decent interest rate. Individual Savings Accounts (ISAs) are usually the first port of call. Up to £20,000 can be paid into an ISA in the 2020/21 tax year, spread across cash and stocks and shares. Other options include fixed-notice savings accounts, which pay a little more interest but require advance notice of withdrawals, while some current accounts now pay competitive interest rates, provided a certain balance is maintained. Take time to research some money-saving tips and compare the different accounts available.

A mortgage deposit

Cash savings would usually be the place to start here too. But the low interest rate environment means returns are often sluggish. Other options come into play if paying a mortgage deposit is likely to be five to ten years away. For example, you could use some of your ISA allowance to invest in stocks and shares, taking a little more risk for a better chance of making your money grow faster.

Saving for children

The longer you invest, the more risk you can take with your investments, as stock market volatility – the ups and downs – are ‘smoothed out' over time. If you start a fund for a child when they are born, that gives you at least 18 years to build up a decent-sized fund. You can use a Junior ISA to invest on behalf of a child, and if you start paying £170 a month into a Junior Stocks & Shares ISA when a child is born, you’ll end up with around £53,000 by the time they turn 18 (assuming average annual growth of 5%).

This figure is only an example and not guaranteed – it is not a minimum or maximum amount. What you will get back depends on how your investment grows and on the tax treatment of the investment. You could get back more or less than this.

Building a retirement fund

Again, unless you’re within a decade or so of retirement, this is a long-term goal that means you can afford to take a little risk. Exactly how much risk depends on your own personal risk appetite, and it’s always a good idea to spread your money across different types of investments in order to manage investment risks (this is called diversification). Stocks & Shares ISAs can be used in saving for retirement, but there are good reasons to use a pension, too. For instance, the government pays tax relief on the money you pay into your pension, while your employer will top up the contributions you make to any workplace pension you open.

Taking the tech opportunity

There are a lot of technology tools out there that can make sure you get the best out of your savings. A growing number of banks offer apps that allow you to compartmentalise your money into different pots, with each linked to different goals or purposes.

There are also mobile phone apps that round up your spending to put the spare amount into a Stocks & Shares ISA of your choice; online services that help you view and manage all your finances in one place; and apps that analyse your spending habits, calculate what you can afford to save each month and put that amount into a separate savings account.

The current low interest rate environment isn’t good news for cash savers. But there’s a vast range of resources out there to help you make your cash work hard for you. It might be the first and most simple step you take on your money journey, but saving money might also be the biggest and most effective financial habit you ever get into.

 

The value of an investment with St. James's Place will be directly linked to the performance of the funds selected and may fall as well as rise. You may get back less than the amount invested.

A Stocks & Shares ISA does not provide the security of capital associated with a Cash ISA.

The levels and bases of taxation and reliefs from taxation can change at any time and are dependent on individual circumstances.

Getting the best out of your money starts with saving it. Whether you’re a teenager saving up for new trainers, a young adult building a mortgage deposit, a parent creating a fund for their kids, or your priority is to retire in comfort, it’s vital to make your money work as hard as it can. But what does that mean?

Setting goals

It begins with knowing what you want from your savings, so you can ensure that you’re taking the most effective approach. It’s likely that you’ll have started with a simple savings account, but over time you might also use different forms of cash savings as well as stock market-based investments such as shares and funds.

Each type of investment, or asset class, has its own role to play. Much will depend on your goals, some of which will be relatively immediate, such as saving for a holiday, and others that will be more long term, such as building a pension pot. But it’s important to remember that different savings products act in different ways.

For example, cash accounts are ideal for rainy-day savings because they can be accessed either immediately or at short notice. However, the interest rates can be very modest, which means the value of your savings can be eroded over time by the effects of inflation. That’s why stock market-based investments can sometimes be more effective when saving for goals that are at least five years away. But while they typically provide better returns over the long run, there is more risk involved.

Goals: from rainy days to retirement

A holiday

This is likely to be a short-term goal, so locking your money away probably isn’t a good option. The main option is a cash savings account with a decent interest rate. Individual Savings Accounts (ISAs) are usually the first port of call. Up to £20,000 can be paid into an ISA in the 2020/21 tax year, spread across cash and stocks and shares. Other options include fixed-notice savings accounts, which pay a little more interest but require advance notice of withdrawals, while some current accounts now pay competitive interest rates, provided a certain balance is maintained. Take time to research some money-saving tips and compare the different accounts available.

A mortgage deposit

Cash savings would usually be the place to start here too. But the low interest rate environment means returns are often sluggish. Other options come into play if paying a mortgage deposit is likely to be five to ten years away. For example, you could use some of your ISA allowance to invest in stocks and shares, taking a little more risk for a better chance of making your money grow faster.

Saving for children

The longer you invest, the more risk you can take with your investments, as stock market volatility – the ups and downs – are ‘smoothed out' over time. If you start a fund for a child when they are born, that gives you at least 18 years to build up a decent-sized fund. You can use a Junior ISA to invest on behalf of a child, and if you start paying £170 a month into a Junior Stocks & Shares ISA when a child is born, you’ll end up with around £53,000 by the time they turn 18 (assuming average annual growth of 5%).

This figure is only an example and not guaranteed – it is not a minimum or maximum amount. What you will get back depends on how your investment grows and on the tax treatment of the investment. You could get back more or less than this.

Building a retirement fund

Again, unless you’re within a decade or so of retirement, this is a long-term goal that means you can afford to take a little risk. Exactly how much risk depends on your own personal risk appetite, and it’s always a good idea to spread your money across different types of investments in order to manage investment risks (this is called diversification). Stocks & Shares ISAs can be used in saving for retirement, but there are good reasons to use a pension, too. For instance, the government pays tax relief on the money you pay into your pension, while your employer will top up the contributions you make to any workplace pension you open.

Taking the tech opportunity

There are a lot of technology tools out there that can make sure you get the best out of your savings. A growing number of banks offer apps that allow you to compartmentalise your money into different pots, with each linked to different goals or purposes.

There are also mobile phone apps that round up your spending to put the spare amount into a Stocks & Shares ISA of your choice; online services that help you view and manage all your finances in one place; and apps that analyse your spending habits, calculate what you can afford to save each month and put that amount into a separate savings account.

The current low interest rate environment isn’t good news for cash savers. But there’s a vast range of resources out there to help you make your cash work hard for you. It might be the first and most simple step you take on your money journey, but saving money might also be the biggest and most effective financial habit you ever get into.

 

The value of an investment with St. James's Place will be directly linked to the performance of the funds selected and may fall as well as rise. You may get back less than the amount invested.

A Stocks & Shares ISA does not provide the security of capital associated with a Cash ISA.

The levels and bases of taxation and reliefs from taxation can change at any time and are dependent on individual circumstances.

Getting the best out of your money starts with saving it. Whether you’re a teenager saving up for new trainers, a young adult building a mortgage deposit, a parent creating a fund for their kids, or your priority is to retire in comfort, it’s vital to make your money work as hard as it can. But what does that mean?

Setting goals

It begins with knowing what you want from your savings, so you can ensure that you’re taking the most effective approach. It’s likely that you’ll have started with a simple savings account, but over time you might also use different forms of cash savings as well as stock market-based investments such as shares and funds.

Each type of investment, or asset class, has its own role to play. Much will depend on your goals, some of which will be relatively immediate, such as saving for a holiday, and others that will be more long term, such as building a pension pot. But it’s important to remember that different savings products act in different ways.

For example, cash accounts are ideal for rainy-day savings because they can be accessed either immediately or at short notice. However, the interest rates can be very modest, which means the value of your savings can be eroded over time by the effects of inflation. That’s why stock market-based investments can sometimes be more effective when saving for goals that are at least five years away. But while they typically provide better returns over the long run, there is more risk involved.

Goals: from rainy days to retirement

A holiday

This is likely to be a short-term goal, so locking your money away probably isn’t a good option. The main option is a cash savings account with a decent interest rate. Individual Savings Accounts (ISAs) are usually the first port of call. Up to £20,000 can be paid into an ISA in the 2020/21 tax year, spread across cash and stocks and shares. Other options include fixed-notice savings accounts, which pay a little more interest but require advance notice of withdrawals, while some current accounts now pay competitive interest rates, provided a certain balance is maintained. Take time to research some money-saving tips and compare the different accounts available.

A mortgage deposit

Cash savings would usually be the place to start here too. But the low interest rate environment means returns are often sluggish. Other options come into play if paying a mortgage deposit is likely to be five to ten years away. For example, you could use some of your ISA allowance to invest in stocks and shares, taking a little more risk for a better chance of making your money grow faster.

Saving for children

The longer you invest, the more risk you can take with your investments, as stock market volatility – the ups and downs – are ‘smoothed out' over time. If you start a fund for a child when they are born, that gives you at least 18 years to build up a decent-sized fund. You can use a Junior ISA to invest on behalf of a child, and if you start paying £170 a month into a Junior Stocks & Shares ISA when a child is born, you’ll end up with around £53,000 by the time they turn 18 (assuming average annual growth of 5%).

This figure is only an example and not guaranteed – it is not a minimum or maximum amount. What you will get back depends on how your investment grows and on the tax treatment of the investment. You could get back more or less than this.

Building a retirement fund

Again, unless you’re within a decade or so of retirement, this is a long-term goal that means you can afford to take a little risk. Exactly how much risk depends on your own personal risk appetite, and it’s always a good idea to spread your money across different types of investments in order to manage investment risks (this is called diversification). Stocks & Shares ISAs can be used in saving for retirement, but there are good reasons to use a pension, too. For instance, the government pays tax relief on the money you pay into your pension, while your employer will top up the contributions you make to any workplace pension you open.

Taking the tech opportunity

There are a lot of technology tools out there that can make sure you get the best out of your savings. A growing number of banks offer apps that allow you to compartmentalise your money into different pots, with each linked to different goals or purposes.

There are also mobile phone apps that round up your spending to put the spare amount into a Stocks & Shares ISA of your choice; online services that help you view and manage all your finances in one place; and apps that analyse your spending habits, calculate what you can afford to save each month and put that amount into a separate savings account.

The current low interest rate environment isn’t good news for cash savers. But there’s a vast range of resources out there to help you make your cash work hard for you. It might be the first and most simple step you take on your money journey, but saving money might also be the biggest and most effective financial habit you ever get into.

 

The value of an investment with St. James's Place will be directly linked to the performance of the funds selected and may fall as well as rise. You may get back less than the amount invested.

A Stocks & Shares ISA does not provide the security of capital associated with a Cash ISA.

The levels and bases of taxation and reliefs from taxation can change at any time and are dependent on individual circumstances.

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