Interest rates are currently very low. 0.1% low. What you may not realise is that any savings you have sitting in a bank account earn an interest that is closely tied to this rate.
Right now, your savings are probably earning an abysmally low interest rate - but you can do better.
Here are some quick ways to get the most interest on your money, maximise savings and get the most from your money.
Many people do not know how to invest money or how to start investing. Fortunately, there are several very easy ways to start investing. And you don’t need a huge amount of money or knowledge to get started.
Please don’t be too put off by what you don’t understand. No matter what you want to do, there are usually numerous and highly regulated investment firms that can help you for a low-cost, and that cater to people who are learning the basics.
There are three approaches you can take to get started
- The easy way: If you aren’t well versed in trading and prefer to give experts control of your money, you can do this without paying an expensive financial adviser. You can use a robo-adviser, which will invest your money in diversified funds on your behalf (read the pros and cons of this here).
- Another easy way: You can also put your money into an Investment Savings Account (ISA) or Self-Invested Personal Pensions (SIPPs), which can also invest your money for you with certain tax advantages. (more on this here)
- A more hands on way: If you’re willing to take a more active approach, there are low-cost and free investing apps in the UK like eToro, FreeTrade and Revolut that make it easy to directly invest in individual stocks, funds and other investable assets. These apps also provide you with education and guidance along the way. With some providers you can even “copy” the investing strategies of others.
Investing carries the risk of losing your money, however the upside potential can be rewarding. Especially over a long timeline, as the value of markets tends to rise over time despite the dips and depressions along the way.
2. Pay off debt
A good rule of thumb is to not invest until you have cleared your debts. This is especially true if you are paying a higher interest on debt than you’re getting from savings. If you are, then you are losing money. This includes credit card debt and mortgages. So channel any savings into paying off your highest-interest debt as quickly as possible.
3. Use higher interest savings accounts
Looking for a better place to put cash savings? Unless you’re already getting a stellar interest rate, you might be able to find a higher-interest account and transfer your savings into it. Use a comparison site like Which? to find high interest savings accounts with better rates.
You can also look for a savings account with a high fixed rate. These are especially useful for holding quickly accessible savings. This includes an emergency fund and other longer-term cash savings you may have.
4. Create a passive income
Put your money and time into something that pays you back. Passive income is income that you don’t actively work to earn. But in order to make the money work for you, you will need to make an initial investment.
Examples of passive income include interest income from bonds and savings, and dividend income from stocks. Rental income from a property is another example of passive income. Creating a product like a song, video, book, or invention that earns royalties is another example.
Track your savings
However you choose to make the most of your savings, you can use Money Dashboard to track it. Like other inflows and outflows, you can label and categorise any income, interest and debts, and track how it changes over time.