Global interest rates have been low for a number of years now. While many people assume this is a brilliant thing for the economy, it’s not always ideal. While there are numerous benefits of lower interest rates, e.g. they can reduce the price of your monthly mortgage repayments, and they can make borrowing costs cheaper, low low-interest rates are not so good for your savings and lenders.
So, if you want to make the most out of your money, then you can consider investing it to make the most out of it and earn the best returns. It’s important to remember that investing isn’t exactly the same as saving; there are risks involved, but if you choose the right vehicle, then they could be offset by the returns you make.
So, if you’re an investor or saver who wants to make the most out of your savings while the interest rates are low, what should you do? Here are some of our top tips to help you.
Invest in a Stocks and Shares ISA
Investing in stocks and shares and setting up an individual online savings account (otherwise known as an ISA) is a great way to make the most out of your savings, even when interest rates are low. You can invest up to £20,000 per year in one of these accounts. Any interest or dividend income you earn in an ISA is yours. You will not be expected to never pay capital gains or income tax on the interest you earn any income that you make from your investments. There is a wide range of shares, funds, investment trusts and exchange-traded funds for you to choose from.
If you want an account that allows you to withdraw money when you need it and replace it in the same year without eating into your annual ISA allowance, then a flexible ISA is a great option for you. ISAs and flexible ISAs allow savers the potential to earn stronger returns than traditional savings accounts, so they’re a great option for people looking to make the most out of their savings.
There are lots of ISA providers available to choose from including Willis Owen who offer their customers stocks and shares ISA with a good wide range of investment choices. You should try swing trading, whether you’re an experienced day trader looking to switch to something new and interesting or you’re completely new to the world of investing. You can learn swing trading basics on your own time at VectorVest.
Make Money on Your Current Account
Even when interest rates are low, it’s still possible to make money by placing your savings in a current account. It’s good to remember that not all current accounts are the same, so make sure you find one that gives you a good deal. However, you may need to jump through a few hoops in order to find a competitive savings rate.
If you have a large sum of money in your current account, then you should consider moving the money into investment accounts and building a balanced portfolio. This will allow you to enjoy better returns.
Make the Most Out of Your Mortgage
When interest rates are low, lots of savers choose to invest their money in property. Homeowners with flexible or offset mortgages are able to overpay on their mortgage. This means they will be paying interest on a lower amount and can reduce the overall payment time. However, it’s important to remember to check with your lender that you won’t be charged for overpaying on your mortgage.
You could also consider using your savings to buy rental properties or invest in a crowdfunded property. Whichever of these options you choose, make sure you consider all of them to make an informed decision.
When you’re saving money for something, it’s often hard to find money to put away to reach your target, so the amount of interest earned is an important bonus. However, with interest rates remaining low, this task is even harder than ever before. But there are some things you can do to make the most out of your savings despite the low-interest rates.
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