Saving Up For a Rainy Day

With the credit crunch plunging the financial world into chaos, never has it been more important to think about the best and safest way to put your money into savings for the future. Confusingly, there are a vast number of options when it comes to putting your money aside to save up, and without the right advice and guidance it can be difficult to know which choice is the right one for you. To help you make this important decision, here is a brief guide to some of the options that are available to you.

eSavers. A popular and relatively new option for those wishing to put some money away in savings, eSavers are a form of internet banking that are usually chosen by people because of their generally high interest rates. Alliance and Leicester, for example, are currently offering an eSaver account with 6.60% gross p.a. /AER (variable). eSavers are accessible online, but require you to be fairly independent in maintaining the account as you probably won’t be sent statements or reminders from your bank.

ISAs. When it comes to investments, ISAs (or Individual Savings Accounts) are largely popular because of their tax-free benefits. An ISA in itself is not so much a product, but the wrapper around the product which ensures that you don’t have to pay tax on your savings. They do have limits, but are a great way of letting your money accumulate without losing out to the taxman. ISAs can also be used as an investment rather than a saving, that is you can invest in stocks or bonds which are protected by your ISA. Some companies like Legal & General now even do specific Ethical ISAs, where your money will only be invested in companies that meet high ethical standards.

Savings Bonds. Savings bonds are another form of investment that can generate money for you with little effort on your part. You are usually not allowed access to your money over a set period of time with a savings bond, which ensures that the money you put into it stays in one place to accumulate interest. They also normally have the benefit of guaranteeing a fixed interest rate over the term of your bond, so you won’t have to worry about fluctuating interest. Barclays, for example, offer a 9 month fixed rate savings bond with 5.20% AER/gross pa for balances between £5,000 and £39,999.99, and 5.70% AER/gross pa for balances between £40,000 and £500,000.

Once you’ve explored all of the possible options when it comes to setting up your savings, then you can make a decision without feeling that you might be missing out on a great deal.

Rates and products quoted are correct at the time of writing (02.11.08) and may be changed at the discretion of the provider.