Five ways to maximise your savings

We all want to make the most of our money, but with interest rates so low, how can you make it work harder?

Here are five options to help you get the most from your money.

  1. Switch your bank
  2. Try investing
  3. Get government bonuses
  4. Lock away your cash for longer
  5. Use an ISA for tax-efficient benefits

Switch your bank

This may seem like an obvious suggestion, but you could boost your returns by simply switching your savings pot to a new provider.

At present, many people open savings accounts with their current account provider and don’t shop around. By having a look at rival providers you could move your money and earn a higher interest rate. Many providers offer generous introductory offers, sometimes even cash incentives if you’re willing to switch your current account. Always do your research before signing on the dotted line, to make sure you’re getting the right account for your financial needs.

Try investing

With low interest rates across the savings market, many people are turning to investment as they seek a higher return. Some people can be put off stocks and shares because they believe it’s a risky venture, but there are many options available depending on what level of risk you’re comfortable with.

While the value of your investment could go down as well as up, stocks and shares tend to outperform cash savings over a longer period. This means investment in stocks and shares could be worth considering if you’re looking towards the long term.

You can speak to a financial adviser to get more information about investing.

Get government bonuses

If you’re saving for a house or for retirement then there is a government scheme designed to encourage you to save.

The Lifetime ISA offers free government bonuses for those saving towards a first home or for retirement. It's well worth considering if you fall into either of these camps. It's available to 18-39 year olds and is geared towards first time buyers and those looking to build an additional pension pot for retirement.

More about Lifetime ISAs:

  • Maximum contribution of £4,000 a year based on the current tax year.
  • Contributions can be made in regular payments or lump sums.
  • Bonus applied to your Lifetime ISA account on a monthly basis, based on the amount paid in.
  • The bonus can be used at exchange or completion for your first home.
  • Lifetime ISAs can be invested in cash or stocks and shares (OneFamily only offers a stocks and shares Lifetime ISA).

Find out more about the OneFamily Lifetime ISA here.

Lock away your cash for longer

If your cash is in a low-paying easy access savings account, consider locking your cash away for a longer period. Longer fixes tend to offer higher rates, so if you don’t need access to your cash for a number of years you can lock it away and achieve a higher rate.

However, be aware that if interest rates across the market rise, your fixed rate will not. So think carefully before tying your money up and only base your decision on your individual financial situation. It’s also a good idea to keep a small pot in an easy access account for emergencies.

Use an ISA for tax-efficient benefits

Whether you are saving or investing, by doing so in a tax-efficient ISA wrapper you won’t be liable to pay tax on savings interest earned or investment growth generated. Opening an ISA is quick and easy, and you can spread your cash across several types of accounts.

For instance, you can split your £20,000 annual allowance between cash and stocks and shares. You can also open up a Junior ISA for your children.

Note: We take care to ensure Talking Finance content is accurate at the time of publication, but individual circumstances can differ so please don’t rely on it when making financial decisions.