How to make your savings work best for you

Knowing what to do with your savings can be extremely tricky, particularly if you’re not overly confident with some of the specific financial terminology.

The ultimate aim for everyone is likely to be the same: to see their savings grow. The best route for this will vary depending on your circumstances, but we’ve taken a look at some of the most popular options to help you make a decision that’s right for you.

Consider investing

One of the best ways to make the most of your savings is through investment. With the right management, your savings could grow at a greater rate than they would in a standard account.

This is only worthwhile if you can afford to lose direct access to the money, as it will likely be tied up in stocks and shares – or a variety of other financial instruments.

If this is something that appeals to you, it’s a good idea to seek investment advice from a qualified financial advisor.

Monitor interest rates

Interest rates are used as a tool to control inflation – when inflation increases, so do interest rates.

By having an awareness of the rate you’re getting on your existing savings account, you’ll be able to tell when it’s a good time to switch. When extrapolated over several years, you could be missing out on a decent amount of returns based solely on who you bank with and the account you have.

Government-backed schemes

If you’re keen to start saving for retirement or to buy a home, a Lifetime ISA is a great option. There’s a £4,000 annual limit on what you can pay in, and you can only use it until you’re 50. The government will add a 25% bonus to your savings, though this will be no more than £1,000 per year.

You’ll only be able to withdraw the money when you reach 60, buy your first home, or if you’re terminally ill with less than 12 months to live. Any other reason results in a 25% withdrawal charge.

For people on lower incomes, Help to Save is a government-backed savings account that gives you a bonus of 50p for every £1 saved over a four-year period.

Bonds

Premium bonds have long been an extremely popular savings option because they provided higher interest rates and earned entry into a prize draw to win up to £1 million each month.

However, recent interest rate increases in the UK mean that they’re no longer as much of an attractive proposition. Cuts are expected by the Bank of England, though, and when that happens it may be a good time to reconsider buying bonds.