Savings Q&A

If you're lucky enough to have spare cash to invest then you'll need to make decision as to what to do with it.

Question:

Should I save or pay off debt?

Answer:

Use spare cash to pay off debt such as loans and mortgages when the interest rate is low. If it's high, inflation will erode the value of your debt.

Question:

My debts are minimal, where should I save?

Answer:

Your choices are broad. You could deposit your money in a bank or building society - even small investments can attract six per cent interest.

You can also invest in national savings, bonds, individual company shares, unit trusts (which invest in a number of companies). In the long run shares and trusts usually do better than deposit accounts.

Question:

Which investments are safe and which are risky?

Answer:

No investment is 100 per cent safe. But generally bonds, national savings and deposit accounts are safer than shares or unit trusts as the latter are subject to the movements of stockmarkets.

Question:

What are Isas ?

Answer:

Isas (or individual savings accounts are tax-efficient investments. Isas replaced Peps and Tessas. Click here to find out more about ISAs.

Question:

How do I find the best bank account?

Answer:

There are many factors to consider. Do you need a local branch? Do you need telephone banking? Would you like to bank on the Internet? Do you want a current account with a cheque book? Will you need a Switch, Delta, Visa, MasterCard or other card? Is the rate of interest important to you?

Question:

I want the chance to get a windfall if any more building societies convert to banks or are taken over - what should I do?

Answer:

There are more than 70 remaining building societies. Any of them could convert. You need to take a gamble on which you think will be next to go. Many building societies such as the Nationwide have forced new customers to sign any future windfalls over to charity.

Question:

Can I open an offshore account?

Answer:

Yes, but unless you are living abroad or not resident in the UK for tax purposes you will almost certainly need to tell the taxman about your investments.

More savings links