Finding The Right Saving & Investing Plan

In today's era of record low interest rates, it can be hard to know where to start with a savings and investment plan - especially if you are looking to find decent returns that will beat inflation. There is also a huge range of diverse products available, so where can you start to make things as easy as possible?

Cash savings

These are the basic 'bread and butter' of savings and are offered through a huge range of institutions, from high street banks through to supermarkets. You can compare different interest rates online to find the best on offer. Instant access accounts will tend to have the lowest interest rates, but you can take your money out freely at any time. Notice accounts will offer more, but will tie you in so that you have to request a withdrawal. Some of these accounts will only allow you a certain number of withdrawals to get the advertised interest rate.

ISAs

Individual Savings Accounts used to be the go-to for savers, but now that savers can earn £1,000 interest per annum without having to pay tax, they aren't the automatic first choice that they used to be. You can put your money into a cash or stock market ISA. You can have an ISA every year and the interest on it will always be free from the tax man. You can transfer ISAs to get better rates over the years, but must follow the inter-bank transfer process, so as not to lose your tax-free benefits. There are also specific ISAs, such as the Help to Buy government ISA, which offers a tax-free incentive payment worth 25% of savings to help buyers save for a house deposit.

The stock market

This has tended to be the first choice for savings in the longer term, such as pensions. This is because the stock market has traditionally outperformed cash in the longer-term - at least 5 years and ideally more. You can invest in funds, indexes, trackers or individual stocks and shares. It is very important to check the management fees and charges as these can heavily impact on your eventual 'pot'. Index trackers tend to have the lowest funds, and they track a specific index, such as the FTSE 100 or 250. Because the stock market can be complex, many people will use an Independent Financial Advisor (IFA) to help them create the right portfolio, especially for pension savings.

Peer to Peer lending

P2P lending is a relatively new form of lending which some savers are using to boost their returns. It can offer interest rates of up to 10%, but the market isn't regulated and the government hasn't yet launched its innovative finance ISA, which will hold savings and investments in these newer products. Savers are advised to proceed very carefully and read the terms and conditions with care before making a decision.

Property and alternative investments

Many long-term investors and savers will also look at other forms of non-cash saving. Property has always been a popular investment, although new tax rules will make it less advantageous from 2017. Other investments can be bought in areas as diverse as wine and fine art!

As ever, the trick is to know your savings goals, your timeframes, and your degree of acceptable risk before you begin to put together a portfolio of savings. It is also sensible to first have expensive debts paid off, as you are unlikely to earn more on your savings as you will be paying to service debt. Speak to a financial advisor for quality, tailored advice.