I have simply the best advice on just how to get the very best value when you have money to save. If instead you would prefer to read about spending less in everyday life, thus saving money in that sense, then please visit my money-saving checklist page.
So -- you are in a better position than most, or you've enjoyed a recent windfall -- and you want to see just what is the best possible deal for you to save your money, whilst getting the best deal (highest interest savings account). Have a read of my guide to see if a savings account, or perhaps some kind of investment, is the best option for you.
I might even throw in an oddball idea -- like should you pay off some of your mortgage capital with it instead of stashing the cash?! Ultimately, of course, its your money, and you can do with it what you want, but if I can help you in some way to make an informed decision, or I can stimulate some ideas for you, then it's my pleasure! When base interest rates are low, as they are now in the US and Europe, savers often struggle to find a good deal.
So -- you are in a better position than most, or you've enjoyed a recent windfall -- and you want to see just what is the best possible deal for you to save your money, whilst getting the best deal (highest interest savings account). Have a read of my guide to see if a savings account, or perhaps some kind of investment, is the best option for you.
I might even throw in an oddball idea -- like should you pay off some of your mortgage capital with it instead of stashing the cash?! Ultimately, of course, its your money, and you can do with it what you want, but if I can help you in some way to make an informed decision, or I can stimulate some ideas for you, then it's my pleasure! When base interest rates are low, as they are now in the US and Europe, savers often struggle to find a good deal.
Got some money to stash away? Get the best value savings account! Money advice about tax efficient savings with good interest
Consider your own requirements ahead of the headline interest rate
Can you truly afford to lock away the money you want to save for a long time, and are you sure you won't need access to it suddenly?
Any of the very best savings plans, in terms of interest paid, almost always involve locking away your money where you won't be able to get to it in a hurry. For example, a savings plan I was reading about recently when I was looking to invest a couple thousand required that you give SIX MONTHS notice if you wanted to withdraw ANY money without incuring a penalty! This is fine, of course, if the money you want to save is truly in the zone where you can leave it alone for that period of time, but, for most of us, the thought of not being to access what is, after all, OUR money, easily does not sit well!
On the other hand, instant access savings accounts, where your money is not tied up at all, such as those likely offered by your current banking institution, often offer a measly interest rate -- and remember that you will have to pay tax on standard savings accounts, too!
Can you truly afford to lock away the money you want to save for a long time, and are you sure you won't need access to it suddenly?
Any of the very best savings plans, in terms of interest paid, almost always involve locking away your money where you won't be able to get to it in a hurry. For example, a savings plan I was reading about recently when I was looking to invest a couple thousand required that you give SIX MONTHS notice if you wanted to withdraw ANY money without incuring a penalty! This is fine, of course, if the money you want to save is truly in the zone where you can leave it alone for that period of time, but, for most of us, the thought of not being to access what is, after all, OUR money, easily does not sit well!
On the other hand, instant access savings accounts, where your money is not tied up at all, such as those likely offered by your current banking institution, often offer a measly interest rate -- and remember that you will have to pay tax on standard savings accounts, too!
!! TOP TIP: Before you think about saving money in a savings account or making an investment !!
Pay your debts off first! (I'm making a possble exception for your mortgage, if you have a low interest rate - you need to check!)
In any financial climate, and in order to make money, bankers will always charge more to borrow money than they will pay on interest (at least in a standard savings account). So, if you have any debts, and these debts are not "soft loans" from family or friends, or limited 0% credit cards debts that you fully intend to pay off anyway, then you will always save more money by paying off the debts before stashing the cash!
Pay your debts off first! (I'm making a possble exception for your mortgage, if you have a low interest rate - you need to check!)
In any financial climate, and in order to make money, bankers will always charge more to borrow money than they will pay on interest (at least in a standard savings account). So, if you have any debts, and these debts are not "soft loans" from family or friends, or limited 0% credit cards debts that you fully intend to pay off anyway, then you will always save more money by paying off the debts before stashing the cash!
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However, if you are offered an excellent interest rate on your savings, always check the ramifications and penalties that may apply if you withdraw your money quickly (too soon for the terms), and check that you are comfortable with it before you proceed is a key piece of advice I want to give to you.
Paying tax on the interest paid to your savings account
As a general rule, tax is payable on any interest you earn from your savings. Look for the exceptions, though! In some areas, for example in the UK, the government allows you to save up to a certain amount each year, and if you save only this amount (or less), then the interest paid on your savings is tax free! These are called ISAs (or Individual savings accounts). Check with a local broker to see if a similar scheme exists for your area, as this kind of savings account offers excellent value for your savings. Why pay tax where you don't need to, if its legal and encouraged?
Good advice is to always shop around
Get to know a few different banks in the course of deciding exactly where to put your savings for the best return. As ever, shop around for the best deals.
Get a decent introductory interest rate, then move the money once the intro' period is over
Many banks will entice you by offering a really very good interest rate at the time you open a savings account, but you may find, that, once the introductory period ends, you may be getting little more than inflation back on your savings (ie they are no longer growing at all!). Its my advice that you make a note in your diary when any introductory deal ends, and then check again with competitor savings accounts at that time to see if there are any better deals. Be careful, though, to make sure you do not breach any of the conditions I talked about above where withdrawing your savings quickly from the original savings account means you might lose 6 months of interest, or worse! If you did opt for a long notice of withdrawal period, you need to start looking for a better interest rate sometimes months before the introductory offer ends.
You can read more of my money saving articles: links, tips and ideas from the main money-saving website homepage.
As a general rule, tax is payable on any interest you earn from your savings. Look for the exceptions, though! In some areas, for example in the UK, the government allows you to save up to a certain amount each year, and if you save only this amount (or less), then the interest paid on your savings is tax free! These are called ISAs (or Individual savings accounts). Check with a local broker to see if a similar scheme exists for your area, as this kind of savings account offers excellent value for your savings. Why pay tax where you don't need to, if its legal and encouraged?
Good advice is to always shop around
Get to know a few different banks in the course of deciding exactly where to put your savings for the best return. As ever, shop around for the best deals.
Get a decent introductory interest rate, then move the money once the intro' period is over
Many banks will entice you by offering a really very good interest rate at the time you open a savings account, but you may find, that, once the introductory period ends, you may be getting little more than inflation back on your savings (ie they are no longer growing at all!). Its my advice that you make a note in your diary when any introductory deal ends, and then check again with competitor savings accounts at that time to see if there are any better deals. Be careful, though, to make sure you do not breach any of the conditions I talked about above where withdrawing your savings quickly from the original savings account means you might lose 6 months of interest, or worse! If you did opt for a long notice of withdrawal period, you need to start looking for a better interest rate sometimes months before the introductory offer ends.
You can read more of my money saving articles: links, tips and ideas from the main money-saving website homepage.
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