You often read about ‘savings and investments’, but the difference isn’t always clear. To put it simply: savings refers to the cash you hold in the bank or building society and investments are everything else.
There are lots of places to get advice on your investments, but it’s much harder to find advice on savings –this is why we created Savings Champion. Savings are our speciality and sole focus.
While it’s difficult for many of us to imagine setting money aside in such a tough economic environment, it’s really important to try and build up the equivalent of a few months’ income as a minimum, so it can be readily available in case of a rainy day.
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You never know when there might be an emergency or a change in your circumstances –the boiler might break down in the middle of winter or if you’re made redundant, you’ll still need to pay the bills while you look for another job. You need to be sure you won’t lose any of that money, so where you keep it really matters.
Just £10 a month can make all the difference. While it might not seem much, it’s a great start and over the long term, it can become really worthwhile; after five years, you could be sitting on a nest egg of over £600.
Anyone who’s watched ‘It’s a Wonderful Life’ or who witnessed the panic caused by the 2009 Northern Rock collapse will be familiar with the expression ‘run on the bank’.
Thanks to this and the very real economic problems we have been experiencing over recent years, many people are wary of banks and building societies and think keeping that money under the mattress is the safest place.
But for many reasons this isn’t the case –it’s just important to be careful when deciding where to put your money.
One of the main enemies of the saver is inflation, especially when interest rates are low, as is the case at the moment.
The money you invest will still increase as the interest is added to the account, but the cash value is falling in real terms if the interest rate you are receiving is lower than the rate of inflation.
This is because the items that you need to buy in the future will have gone up in price more quickly than the value of your cash.
Added to this is the huge increase in the number of providers that are cutting interest rates for existing account holders since the Funding for Lending Scheme was introduced in August 2012.
Prior to this, interest rates rarely changed for existing account holders outside of a base rate change.
Since the introduction of the Funding for Lending Scheme, we have seen rate cuts to thousands of accounts, with more happening everyweek.
So, it’s vital to shop around for the best possible interest rates for your savings. You also need to find the type of savings account that best suits your particular circumstances and be aware of some of the tricks of the trade that could tempt you into an offer that may not be as good as it appears to be.
This is where Savings Champion can help and you’ll find information in this guide and at savingschampion.co.uk to help you make an informed choice.
Once you have chosen the best savings account, it’s no good simply forgetting about it; you need to keep an eye on the interest rate to make sure it remains competitive.
Again, that’s where we can help. If you sign up to our Rate Tracker service, we’ll let you know when the rate changes on your account and how it compares to the toprates on the market.
And if you sign up to our Rate Alerts, we’ll let you know when new accounts come to the market, so you can see if something better has become available that you might want to switch to.
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