If you want to improve your financial standing, you will need to save money. While there are many ways to reduce your expenses, you should also put money away in interest-bearing accounts to accumulate it. There are many types of interest-bearing accounts which you can use to save money for your future, including those listed below.
The HM Treasury offers National Savings and Investment accounts to help people save money in mainly long-term accounts. They offer a variety of products to the public, but they are not always available or may have limited offers. Some of the products they offer are:
- Fixed-interest or Index-linked saving certificates
- Income, premium, or guaranteed growth, guaranteed equity or guaranteed income bonds
- Direct individual savings accounts, or ISAs
- Children’s bonds
These accounts are often tax-free, and they are secure because you are essentially lending the government money when you purchase one of these accounts. These products may pay interest, stock market income, or tax-free prizes.
Index-Linked Savings Accounts
An index-linked savings account is a fixed-term account in which you agree to leave your money for a certain length of time. If the money is withdrawn prior to the term being completed, then you may forfeit some or all of the interest which has been accumulated on it. However, if your money is in the account for the entire length term, then you’ll get the accumulated interest at the advertised rate, which has been linked for inflation.
You can also put your money into annuities if you want to save for your retirement. An annuity allows you to have a guaranteed income that will last the rest of your life when you retire from your job. The annuity can be bought after collecting your pension, or you can use your own money to get an immediate life annuity to save for your retirement years.
Bank Savings Accounts
Most banks offer savings accounts which pay interest when you put your money into them. While many accounts pay low interest amounts, you can get higher interest rates for saving a large amount of money. High interest rate savings accounts are good for your financial management, whether you’re saving for retirement or a home of your own.
Some investment companies or banks will offer ISAs which can accumulate interest through investments. They allow you to put money in every year from the ISA allowance you receive at tax time. You can either choose the investment vehicles where your money is placed, or an investment advisor can help you choose the investments in which you put your money.
While most of these accounts are more suited to long-term savings, such as saving for retirement, you can also choose ISAs for short-term savings. You can put money aside to buy a house, take a holiday, or save for your children’s future. If you’re unsure how or where to save your money, you should consult with an investment advisor, as they can calculate investment rates to help you decide on an account.