They Say Money Can’t Buy Happiness…
It seems we can’t go a day without stumbling across some sort of mantra about how our happiness is down to our general outlook in life. I do agree with this yet surely it’s hard to have a truly happy life if you’re constantly plagued with money worries and unsure of your financial future? Whilst we are fortunate enough to live in a far less turbulent era than the one our ancestors endured a century ago, these are still rather daunting times. Rising global unrest, fear of terrorism never far from our minds (and real incidents on our very doorstep), worsening economic and political upheaval…sadly, it is fair to say that these are uncertain times. The effects on individual families are real.
For parents, one of the highest priorities is to take care of things at home and try and ensure that we build for the future as best we can. Central to this is looking after household finances, living within your means, and saving for a rainy day. In a time where real wages are being squeezed, this is easier said than done, but with a bit of work and discipline, you can chart a solid course. Yet the last thing you want after putting in the hard yards is for your money to sit idle. After all, if you work hard to put money away, this money should then work hard for you. Again, at a time of record-low interest rates, this is easier said than done. But the truth is that there are some good options out there. It just needs you to research them, rather than falling foul to simply lumping it all into the bank!
Now, Here is Where I Have a Confession to Make: I Used to Be Really on the Ball When It Came to Money Matters
As a career girl, I set up savings and thoroughly monitored my accounts. To my regret and shame, however, I’ve let things slide since becoming a stay-at-home mum (I know, shocker). Having said that, all our finances are ploughed into our children’s school fees and household expenses so there isn’t much for me to stay on top of with regards to savings! Now I run an income-earning blog, though, one of my financial goals is to kickstart our savings plans again. With this in mind, someone suggested I take another look at ISAs.
A Change of Momentum With Savings Rates
For the best part of a decade, savers have had to watch on with dismay as returns on savings and cash ISAs have frittered away. However, in recent times, the landscape has begun to shift a bit. The advent of best buy tables and competition from challenger banks has lifted the bar. You can earn 2.05 per cent from the likes of Paragon if you’re willing to put your money away for two years, while Shawbrook offers 1.9 per cent for a one-year term. As for instant-access accounts, the 1.02 per cent from Charter Savings Bank brings some welcome relief after many months of near-zero returns being the norm.
‘Help to Buy’ and ‘Lifetime’ ISAs
If you don’t already own a home, a Help to Buy ISA is a great way to get the ball rolling. With this scheme, Government contributes 25 per cent of all money saved (maximum bonus of £3,000), thus giving you great encouragement to get onto the housing ladder. But even if you aren’t in the market for a first-time home, these accounts still offer great rates of interest – usually above 2 per cent. Alternatively, Lifetime ISAs are a new way of saving for the future. It is similar to the Help to Buy ISA in the sense that Government offers a 25 per cent bonus on all the money you save, although the bonus for this is capped at £1,000 per year, so the incentive is sizeable. There are some restrictions regarding age, and when you can access your money, as this is geared more for retirement. However, it is definitely an option that should be considered.
A New Type of ISA
The record-low savings rates on offer has been a hotbed for alternatives, and the one to really emerge at the forefront is peer-to-peer lending, whereby those looking to grow their money can do so by lending directly to a consumer in need of a loan. Online platforms facilitate this transaction, and vet borrowers for creditworthiness, but essentially by eliminating the bank or building society in between, both parties benefit from a streamlined approach, and thus get a better rate of interest. Although capital and returns aren’t guaranteed, prime platforms have built a good track record, and the addition of a new category of ISAs has made returns even more lucrative – with interest in the region of 5 per cent generally established as industry standard.
A Hike May Not Be Too Far Away
This one depends very much on whether you have existing, variable-rate loans or not. But for those with savings, signs that the Bank of England may soon increase rates for the first time in over a decade is welcome news. Such a shift will invariably push up savings and investment rates across the board, and, given that inflation continues to rise, this will be a great relief. After all, if inflation goes up more than the rate of return you are getting on your savings, you are effectively getting poorer in real terms. Hopefully, the gap will begin to close in the not-too-distant future, and you really can start getting more for your money. After all, life with kids is not cheap so we could do with the help!
This is a collaborative post.. The owner and editor of http://www.absolutelyprabulous.com is not in any way affiliated with any financial service providers. Readers of this article are advised to seek independent professional advice from a financial expert before investing in this or any other ISA.
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