Use our UK Finance guide and learn by experience. We outline pitfalls so that you don't have to learn the hard way, as many of us often do.
Sound Advice
Three Investment Saving Plans
Many struggle with saving to begin with, never mind having multiple savings accounts. However this is the strategy that leaves many with the key to secure wealth. Why have three accounts? Well for five reasons.
Emergency Account
Things like your car, your health, your children and your home are bound to have unexpected problems that need immediate resolving. The appliances in your home are almost always liable to break or need repair. Also between Christmas, birthdays and anniversaries, its vital that you budget for presents to make sure that you stay in the good books of your loved ones. Your children's education has many hidden expenses that need to be budgeted for. Your health is never constant and having some saved up cash to cover those unexpected health problems cannot be over emphasised.
Retirement
Unfortunately most people only start saving for their retirement when its too late. Some analysts have said that most people under budget for their retirement by as much as 20%. With such a large deficit, many find themselves unable to retire.
The last three reasons are divided up into short, medium and long term savings plans. Lets explain these three.
Short Term
Short term plans can range from as little as 3 months right up to 36 months. This short term plan is especially designed for luxury type expenditures, larger emergencies and annual payments like school fees etc. You could go even shorter with a 32 day fixed deposit account, money market or government retail bond account. Look carefully at your needs and decide which account will suit you best.
Medium Term
This savings account is usually a three to six year plan. This is the plan that you'll use to save for your car or a deposit on a home. For this purpose a unit trust account is probably best. The cost of investment is usually around 5% and in the case of an emergency, you can withdraw some of your cash within 48 hours. Bear in mind though that this will cost you.
Long Term
Six years and upwards is the length of a long term savings plan. This is essentially for your retirement. For this purpose, the stockmarket or property market is the best way to save, invest and have your money work for you. You don't have to be a genius on the stockmarket to keep your money growing. By having a basic portfolio of 12 shares, a little education and a lot of commitment, you can invest your money safely and have it working for you in no time.
Clearly then, saving properly is not a quick job and shouldn't be done quickly either. Take your time and slowly build up your savings accounts and sooner, rather than later, get your savings plans working for you!
