Savings and investment advice across Edinburgh, Glasgow and Central Scotland
With bank accounts and conventional savings accounts often paying negligible amounts of interest, it’s more important than ever to ensure savings deliver a respectable rate of return. Leaving money in a typical current account can actually see its value deteriorate, as real-world prices increase faster than any interest is accumulated.
The current array of savings and investment vehicles can seem bewildering. Savings accounts guarantee deposits but deliver modest returns, while investments offer potential of rewards at the risk of getting back less than the original investment. Fortunately, the Select Investment Managers team are familiar with today’s array of ISAs, bonds and other savings/investment options.
Our recommendations are based on each client’s personal circumstances and preferences. Decisions about where to place savings can be influenced by a number of factors, including:
- a)Salary and income levels. Tax is paid on a lot of savings income, so a higher-rate taxpayer will currently lose 40 per cent of any interest over £500 and a basic-rate taxpayer would lose 20 per cent of anything over £1,000.
- b)Frequency of withdrawal. Typically, higher rates of return are available on investment vehicles where the money can’t be accessed for a certain period of time.
- c)Risk aversion. The highest rates of return are often found in relatively risky areas like the stock market, where it’s possible to make (or lose) significant sums. Conversely, the first £85,000 invested with each UK-regulated bank or building society is protected from loss under the Financial Services Compensation Scheme (FSCS).
- d)Willingness to transfer funds. Many savings vehicles offer tempting introductory interest rates for a limited period, before defaulting to lower rates. Being willing to regularly switch accounts can ensure savings continue to accrue respectable levels of interest. Before transferring funds it is vital to check whether or not you will lose any guarantees or incur any fees by moving your money.
Some of the leading savings and investment platforms
These are among the most common ways to invest savings and surplus funds:
- a)Bank accounts. The introduction of a new personal savings allowance means that from April 2016, the first £1,000 of savings income will be tax-free. This will liberate an estimated 17 million people from paying tax on savings, making conventional bank or building-society savings accounts a convenient option – particularly for existing customers. Some banks presently offer generous introductory rates, too.
- b)ISAs. At present, ISAs are unique in that any interest accrued is free of tax. It’s currently possible to invest up to £20,000 in the 2017/18 tax year, and many ISAs ensure unrestricted access with no penalties or delays.
- c)Fixed-rate savings. These often generate a highly competitive level of interest, but the money invested can’t be accessed for a set period. Easy-access savings accounts offer more flexibility but produce comparatively modest interest.
- d)Premium Bonds. Premium Bonds have been with us for almost 60 years, and it’s estimated that 21 million people hold some. Investments start from just £100, and a million numbers are chosen every month to win anything between £25 and £1 million. However, these “prizes” are in lieu of interest, so an unlucky ticket will actually depreciate from one year to the next.
- e)Stocks and shares. Anyone can buy and sell shares, although it’s often advisable to seek expert advice before entering the stock market. The team at Select Investment Managers can explain how these markets operate, as well as outlining the risks and opportunities they offer.