For years now, most people would say that the best way to save was to put money into a Savings Account provided by one of the many High Street Banks we have in the UK. Primarily there are two types of High Street Savings Accounts, Instant Access and Restricted Access. An Instant Access Savings Account is exactly what it says on the tin – a Savings Account you can access instantly. However, over the past 10-15 years we have seen interest rates drop to a nominal rate and as a result you will be lucky to find an Instant Access Savings Account that offers interest rates above 1.00% and therefore your money is actually losing purchasing power over the long term as the growth is below Inflation.
A Restricted Access account will offer better interest rates, but you must adhere to certain restrictions – these can be putting in a specific amount each month, not withdrawing the money over a certain period of time, and so on. They may offer better interest rates but remove the accessibility you might require in case of an emergency. Restricted Access Saving Accounts also often struggle to offer interest rates that are equal to or greater than inflation as well.
There is a third option available to you! You can open an Individual Savings Account, often referred to as an ISA. ISAs offer you the chance to save money with a realistic opportunity to see real growth above inflation, via a Stocks and Shares ISA – although there is no guarantee you will get back what you invest. Or you can invest directly into a Cash ISA which often offers a higher level of growth than a High Street Bank Savings Account and you are able to have instant access, should you need it. Another bonus to using ISAs is you’re allowed to invest up to £20,000.00 each tax year and any growth is Tax Free!
If you would like to explore the possibility of moving your savings into an ISA then please contact us to arrange a FREE initial discussion with one of our advisers.