Cash ISAs

Cash ISAs are a good place to invest as your
money earns interest without being taxed.
You can put away up to £3,600 a year and
you will generally earn interest upwards of
6% depending on which ISA you choose.
However, interest rates on instant-access
ISAs are variable and many change in
accordance with the Bank of England’s.
You can choose a fixed-rate ISA, which
guarantees a specific rate provided you do
not withdraw funds for an agreed term
(typically 1 to 5 years). The best thing to do
is shop around and choose an ISA that can
earn you the best interest rate while suiting
your needs.

Savings accounts

Another place to keep your money is in a
savings account. Although, interest earned
on this money will be taxed, competitive
interest rates are on offer as banks compete
to get hold of your money in the current
financial climate. The different types of
savings accounts are:-

Instant access: With this type of account you
can access your money on demand without
incurring a penalty. Make sure you read the
small print as some so-called ‘Instant Access’
accounts may punish you for withdrawals by
docking your interest. Others only offer an
introductory rate of interest that will be
reduced after a certain period of time.

Fixed term savings: You will be able to earn
higher rates of interest if you agree to lock
your money away for a certain period of time.
However, you need to be aware that if you
do need to withdraw before the end of the
agreed term some accounts may punish you
by taking some or all of the interest earned.
Regular

Savings: If you plan on putting
money away every month you may be
eligible for some of the best rates available.
However, regular saving accounts often
come with some of the most stringent terms
and conditions, such as limits on
withdrawals and mandatory monthly
deposits, you have to pay attention and keep
on top of your regular savings.
Keeping your savings safe

The legacy of the collapse of Northern Rock
means more and more people are concerned
with the safety of their savings. It is possible
to protect your savings so you can sleep a
little easier at night.

The most important thing is to save with
those covered by the Financial Services
Compensation Scheme (FSCS), an
independent fund coordinated by the FSA
(Financial Services Authority).

Under the FSCS, as at the beginning of
October, your first £50,000 is protected
(£100,000 on a joint account), but due to
the economic climate these figures may
change. However, it is important to realise
that this amount applies to your savings per
institution as opposed to per account.

Outlook

There is always an argument for taking
things too far and blowing the fear of
economic crisis out of proportion. The best
thing to do is to become educated, know
what’s on offer and choose the best savings
plan that suits you and your personal
financial position.

Provided by DeverauxMontague Financial Advisors