What are your Savings goals?
Traditional savings accounts are a great way of investing your cash if you need easy or emergency access to it. ISA’s are also a great way of investing money without having to pay income tax on the profit you earn from them. At Nsure, we like to understand what your eventual goals are, this allows us to find you the best product for your specific savings plan.
An ISA is a tax wrapper which keeps the invested funds free of income tax and capital gains tax. Each individual has an ISA allowance each tax year. You can choose a fixed or variable interest rate. Fixed interest rates are usually higher than variable rates but they usually have penalties if money is withdrawn before maturity. You can only open one cash ISA each year but you can transfer your cash ISAs from previous tax years.
A deposit account or savings account is an account held by a bank or building society that pays interest on your money. You can choose a fixed or variable rates of interest.
Fixed interest rates are usually higher than variable rates but they usually have penalties if money is withdrawn before maturity.
Understanding the right options?
Whilst cash savings are “safe”, interest rates are currently very low and are tracking far below inflation, meaning in real terms your savings are actually losing you money. Inflation has risen sharply since the start of 2022 and official forecasts suggest inflation will average 7.4% this year, peaking at around 9% at the end of the year. This is the highest it has been in 30 years. Cash deposit accounts are suitable for short term savings and emergency funds but are not the ideal solution for a long term investment.
The Financial Services Compensation Scheme (FSCS) protects investors if they have an investment and the provider goes out of business, this includes UK authorised banks and building societies. The maximum compensation that could be claimed is £85,000 per person, per bank/building society.