Today is the last Friday of the month, which for thousands of people across the UK means one thing – payday! Have £100 or so to put aside for the future this month and wondering what to do with it? Here are three smart financial moves you could make.
Savings account
If you don’t want to take any risks with your money, you may be best off keeping your savings in a high-interest savings account. You won’t make a fortune with this strategy but a little bit of interest is always better than nothing.
If you’re willing to do a bit of research, you’ll find that there are some relatively good deals around at the moment. For example, the Virgin Money regular saver account is paying 3% AER until 1 May 2020 and you can save between £1 and £250 each month. This account has no penalties on withdrawals, however, you do have to open the account in a branch. If you’re looking to open a savings account online, the Marcus account currently pays 1.5% AER interest. This account can be opened with just £1.
Investment funds
If you’re keen to generate higher returns on your money and you’re happy to take on a little more risk, an investment fund could be worth considering. The way these work is that your money is pooled together with the money of thousands of other investors and managed by a professional portfolio manager. Whereas in the past you needed to have a lot of money to invest in funds, these days you can get started with very small amounts. For example, online broker Hargreaves Lansdown now allows people to invest in funds with just £100.
In terms of which funds to invest in, there are many choices. Personally, I think global funds – which invest in companies all over the world – are a good option right now, and I particularly like the Fundsmith Equity fund and the Lindsell Train Global Equity fund. Over the last three years, these funds have returned around 75% and 100% respectively, however, past performance is no guarantee of future performance.
Lifetime ISA
Finally, if you’re aged between 18 and 40 and you’re saving for either your first property or for retirement, you may want to consider putting your money into a Lifetime ISA. The big advantage of this account is that for every £100 you put into it, the government will add another £25 for you.
Within this type of ISA, you can invest in a wide range of assets (like the two funds I mentioned above), and all your gains and income will be tax-free too. So, it’s a very effective savings vehicle. However, the Lifetime ISA does have a number of restrictions in terms of accessing your money, so it’s important to be aware of these before you commit your money.