Short and Long Term Savings
Short-Term Savings Accounts –
It is a very good idea to keep at least a little bit of money in a savings account, especially one which you can easily access when you need it, just in case of an emergency or the need for a sudden expenditure.
Reasons that you might benefit from opening a short term savings account over a long term account:
- You may need to spend money quickly or even urgently for a variety of reasons including to fix up your home, repair your vehicle, and so on.
- You might need to help a family member or friend out during a personal emergency.
Long-Term Savings Accounts –
Long-term savings accounts will make it possible for you to deal with more expensive aspects of your life, including for housing deposits, university fees for your children and your retirement sometime in the future. If you are over longer periods of time, investing your money is the best way to see growth, especially through individual savings accounts, national savings certificates, employee share schemes and friendly societies.
Individual savings accounts or ISAs are ideal for tax-free interest and capital gaining. There is no minimum period for locking in your rate, and you can cash in the amount of your ISA at any time that you wish. The disadvantage to ISAs is that you can only invest as much as £7,000 per year. National Savings Certificates can be index linked or fix interest, and are exempt from capital gain and income taxes. They give guaranteed returns, do not offer interest every year, but rather only give interest when the certificates have matured. Employee share schemes are designed to encourage the loyalty of employees by rewarding them when the company is performing well because of their work, by allowing them to save money and to buy shares in the company at a rate that is significantly discounted.
How to Save –
If you can put savings money away separate from day to day spending money, it will generally help you to save more money in the long term. Putting a little bit of money away every week or month is definitely easier for you to do than to set an unrealistic target goal.
If you are going to save money by investing it into a bank or a building society account, then you should act for a account specifically designated for savings. These savings accounts tend to create higher interest rates than current accounts, so your investing will grow much more quickly than with a regular account. Just keep in mind that interest rates are prone to change over time, so make sure that you keep an eye on how much interest you are accruing.
You may also consider joining a savings club, which is offered by many different retailers in order to help consumers with their holiday shopping. You would pay into this savings account on a regular basis, and then at the end you will get all of your money back.
You must be logged in to post a comment.