How to help inflation proof your cash savings before the tax year ends
If you've picked up a newspaper lately, you'll no doubt have seen the stories about inflation being at a 30 year high.
What does this mean? Well, for anyone with their money in a standard savings account it's less than ideal.
If interest rates for these averaged at 1% per annum, savers with this type of account would see their funds shrink by roughly 4% in comparison to inflation.
There is good news though. The tax year doesn't end until 5 April which, in layman's terms, means now is a great time to help inflation-proof your savings.
Here are two of the most effective ways you can help achieve this:
An ISA – or Individual Savings Account to give it its full name – is a tax-free savings or investment account in which you can place up to £20,000 per year.
In total, there are four types of ISA – a cash ISA, a stocks and shares ISA, an innovative finance ISA and a lifetime ISA.
The most well-known of these are cash ISAs, however, they typically offer relatively low interest rates.
A stocks and shares ISA, on the other hand, has the potential to offer a much stronger return, and an independent financial planner can work with you to find an option that will best suit your needs and goals.
With the ability to currently access your pension flexibly from the age of 55, they can also be a great vehicle to make tax efficient savings.
Each year, for instance, most people are entitled to pay up to £40,000 into a pension.
On top of this, it's possible to carry forward three years of unused allowance. This could enable you to make gains of up to £32,000 in tax relief if paying in the full amount.
For advice on how to maximise your cash savings before the end of the tax year, contact us on 01978 806505 or email@example.com to arrange a free 60-minute consultation. Alternatively, you can fill in our contact form and we will get in touch with you.
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