| Introduction |
| Why save? |
| How much should you save? |
| How to beat low rates & risk |
| Savings options |
It’s true that recent years have been tough for savers. Interest rates have been low while many stock market investments have lost money. Here are some tips for improving returns and/or keeping down risk:
Cash ISAs pay some of the highest returns around on savings accounts. Better still, the interest is tax-free, and so worth more than from ordinary savings accounts, particularly for higher-rate taxpayers.
Investing into the stock market on a monthly basis rather than in a lump sum reduces the risk of being caught out by a crash. If the market falls then your next monthly sum will be buying at a lower price, giving you more chance of making money over the longer term.
A range of unit trusts, ISAs and other investment funds offer low-cost monthly saving schemes which allow investors to drip-feed money into the stock market and benefit from this ‘pound cost averaging’ effect.
Long term savers can refine this benefit even further by increasing the amount they save in months when markets are low.
Taking a long term view and spreading your money widely – putting it in a fund (see page 11) rather than all in one company’s shares, for example – will also help safeguard money you put in the stock market.
Lower risk stock market investments can offer share-based returns with some protection against the risk of falling prices.
