Seven ways to save more with low interest rates
Interest rates are currently at historic lows.
So low in fact, that the government have announced that they’ll launch a new savings bond to help savers. But if you’re not convinced that locking your money away for two years is the right thing for your finances, but you need to put your money somewhere that has a rate above inflation, what should you do?
1. Set aside your rainy-day fund
If your fridge broke, or you needed to fix the exhaust on your car, how much money would you need? This is the money you’ll likely need in a hurry, maybe within 24 hours. You’ll want these savings in cash, likely in a current account with no penalties for withdrawing.
2. Know what your savings are for
Are these savings for that fortnight in the Maldives you’ve been dreaming of, to help your children get on the housing ladder, or maybe for your grandchild’s education. If you know that, you’ll likely know the timescale that you have.
3. Set clear goals
You have your target and timescale, you know how much you have, but are you close to reaching those goals? Your goals will help you to define monthly contributions, and even the level of risk you’re able to take. Setting and checking in with clear goals is the best way to ensure your savings and investments are working.
4. Invest instead
Cash savings are no longer king and investing is no longer reserved for the finance professional. If you’re goals are slightly further off taking on some investment risk could be a good way to grow your wealth. Investment risk gives you the opportunity for higher returns which can help you to beat inflation. Investments can also be flexible so check that, at Moneyfarm you can get your money back in a week.
5. Focus on cost
Cost is one of the most important elements of investing because you have control over it. By keeping costs to a minimum you’re able to maximise the impact of any returns.
6. Understand the markets
You’ll want to ensure you have a range of investments making up your portfolio, this will help limit the amount of risk that you’re taking. Fortunately, companies like Moneyfarm can make this a little easier, they’ll manage the investment for you, based on your goals.
7. Review your investment
Risk and return needs to be monitored carefully when you invest. Over time some investments are likely to perform better than others and this will change the shape of your portfolio. You could become over-exposed to a particular asset class, or be holding on to something of limited value. Reviewing your portfolio and rebalancing when required allows you to realise the profits from a successful investment and reallocate it to another area, whilst maintaining a level of risk that is suited to your goals. At Moneyfarm a team of experts monitors the markets and makes these changes for you.
VISIT THE MONEYFARM WEBSITE HERE
Disclaimer
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