What is the best way to save?
There is no one answer that fits all and a good adviser will guide you through the the ones that best suit your needs.
Savings fall in to a number or categories :
Short term — the money you save for Christmas, holidays, a new car, the deposit for your first home, etc.
Short term savings are best achieved through cash accounts. In the past it was normally better to select a fixed term or notice account to get the best rate but these days the same high rates are available on immediate access accounts whether you have £1 or £1m. Generally the most competitive accounts are accessed by telephone or the internet.
If you are happy to forgo the interest and want to take a chance you could consider National Savings Premium Bonds. The capital is guaranteed and readily accessible when you need it.
Medium term — Money you plan to use for a career break, paying your children's future school or university fees, a special trip or to supplement your retirement income etc........
Medium term money needs a bit more consideration. You need it to be as tax efficient as possibe and it needs to fit the purpose. Fixed term investments are excellent if you know exactly when you want the cash or if you need the discipline of being unable to access it.
National Savings Certificates are an excellent way of securing your capital and obtaining a fixed rate of return.
In most situations ISAs provide efficiency and accessibility. There is no fixed term and the underlying funds can easily be switched between different assets. The benefit of being able to switch between asset classes, such as stocks and shares, corporate bonds and gilts etc is that you can match them to your current needs, for example capital growth or income producing. PEPs have always carried more restriction on the type of assets they can hold, the current proposals are that those restrictions are to be lifted and the rules brought in line with ISAs. You should take this opportunity to ensure that your PEPs are still invested in the most suitable assets for your needs.
Once you have used your ISA allowance, (currently £7,000 per year or £583 per month) Investment funds such as OEICs, investment trusts, unit trusts or funds provide an even wider choice of assets to invest in.
Long term savings — Money for your retirement, for medical and care needs.
Long term savings generally means money to produce income in retirement but it does not necessarily mean pension funds. Being elderly seems unthinkable when you are still building a career but its important to remember that retirement income can be needed for thirty years or more.
Do you understand fully what your pension income will buy when you retire. Should you be paying more to your pension or contributing to some other form of investment?
In our experience the group of employees who are most prepared to consider their own future care needs are those who currently work in the health care professisons. Once you stop contributing economically to society you will become totally dependent on others and your accumulated assets.
Managing your portfolio — Fidelity Investments
Existing clients — log into Fidelity here using your own access codes. If you do not have the codes you need, please call us and we will help you to get these.
Click here to log into your Fidelity Investments account.
