We hope you have some exciting plans in store for Easter. As we’re also fast approaching the end of the financial year, if you happen to find yourself with some spare time, why not give your savings strategy a spring clean? With the right approach, you could create a nest egg for you and your family to enjoy in the future. So, this week, we have pulled together a helpful guide highlighting the key things you need to consider when you are reviewing your savings.
ISA Allowance – don’t forget to use this!
You have until the 5 April to use your £20,000 ISA allowance for this year, so use it or lose it!
An ISA is a tax-free savings account. You can split your money between a Cash ISA and a Stocks and Shares ISA, but there are other ISAs available too, such as the Lifetime ISA for those aged between 18 and 39, and the Junior ISA for children. For more information on ISAs, please read our previous blog, What are the different types of ISA?. From 6 April 2018, the ISA allowance will remain at this figure, so why not consider saving a percentage of your monthly income and top up your ISA throughout the year? If you need advice on choosing the right ISA for your situation, then please get in touch.
Change your bank account
Do you have a large pot of cash sitting in a current account with a low-interest rate? You could consider transferring some of your money into a savings account that offers a higher rate of interest. Some accounts offer cash incentives, but the interest you receive over the long term is the most important thing to consider. Fixed-rate accounts tend to offer higher interest rates, but you will be locked in for a set period of time (possibly 3 years), and there may be certain terms and conditions too. If you’re unsure on what account will work best for you, then please speak to our financial planning team.
Check your credit card statements
Are you paying interest on your credit cards? This is a fast way to lose money, so consider transferring your outstanding balance to a new card with a lower rate of interest, or repaying the balance if you can. Many credit cards offer a 0% interest period but always look to pay your balance in full within the set period. Credit cards are one of the most common ways for people to rack up high debts. Once you add up the amount of money lost to credit card interest, you may be surprised to see how much this comes to overtime. Your money would be far better spent in a savings account, which you could use as a ‘rainy day’ fund or put towards a future holiday.
Review your mortgage
When was the last time you reviewed your mortgage? Interest rates are still low, so if you’re on a fixed-rate mortgage that is due for renewal, now is a good time to consider your mortgage options. Many people have benefited greatly after changing their mortgage provider. One option to consider is an off-set mortgage; which allows you to reduce the amount of interest you pay on your mortgage payments by using some of your savings. Always speak to a professional mortgage adviser before you consider changing your mortgage.
Investments can be a good way to get a better return on your money, but this will obviously depend on your chosen level of risk. There are many ways you can invest your money, which include stocks and shares, property, bonds, gilts, etc. We always advise diversifying your investment portfolio, rather than investing a hefty sum into one type of fund; this will help to minimise risk. If you are already an investor when was the last time you reviewed your investment strategy? If your investments are underperforming, then it could be the right time to have a full review – speak to our team for more information.
Look at your Pensions
Many people forget about their pensions, only glancing quickly at their annual statements, but it’s a good idea to regularly check any private pensions, final salary pensions, and whether you are up to date with your state pension contributions. If you have a frozen pension, then you might be better off transferring this into a new or existing pension scheme. However, please be aware there are currently a lot of pension scams, so be very careful before you transfer any part of your pension fund – if it sounds too good to be true, then it probably is! If you would like a full pensions review, then get in touch to speak to one of our team.
To conclude, make sure you also check your bank statements for any unnecessary monthly spending. Many people forget about old subscriptions or duplicated insurance policies, so assess whether all of your outgoings are actually needed. You could save a lot of money by removing any unwanted regular spending from your bank account. Instead, you could allocate this money towards one of your savings pots, which can be used for treats or holidays, for example.
If you would like more advice on how you can create a savings nest egg, please get in touch and speak with one of our financial planners. We would be happy to carry out a review to help you make the most out of your savings. In the meantime, Happy Easter!