How to earn more from your savings

MatthewA By MatthewA, 26th Nov 2015 | Follow this author | RSS Feed | Short URL http://nut.bz/2tlvl_e0/
Posted in Wikinut>Business>Investment

If you have savings then there are a few ways that you can maximize returns. In this respect, gain more interest. To do this, a good savings account and savings plan will provide superior returns.

How to earn more from your savings

As such, the first requirement is to open a savings account. Research savings account options, and ones with particularly competitive interest rates. A savings account with a good rate of interest will provide the best way to maximize savings.

In this respect, fixed rate savings accounts can be a better alternative to variable interest rates. Variable rates can go up or down, while fixed rate interest accounts will remain fixed. It is often the case that these fixed interest rates are also higher than average variable interest rates, and geared towards longer term savings periods. As such, although they may not be as accessible, they will provide a higher rate of interest providing deposits are not withdrawn.

Whichever saving account that is opened, to maximize savings returns requires the highest possible deposits. Savings accounts may have a maximum annual limit, and so it is worth investing as close to this as possible. The larger the deposit is, the more interest will then be generated on the deposit. In addition to this, some accounts may have progressively larger interest rates for larger deposits.

Overall, longer term savings plans are also recommended. This is because of compound interest. Compound interest is the interest generated on the interest. For example, if $300 dollars of interest is generated in one year, then with 3% interest and no additional deposits $9 dollars of interest will be generated the following year. As such, a longer term savings plan will have greater compound interest.

Aside from savings accounts, there are a few other alternative savings options. In the UK there are Premium Bonds where up to £30,000 can be invested. Premium Bonds do not have any interest, but instead the bonds are entered into a monthly prize draw with up to a £1,000,000 jackpot and many additional smaller potential returns. As such, with a larger investment you can expect to win at least a few small Premium Bond draws annually, and so they can potentially provide better returns than savings accounts.

Tags

Bonds, Isa Accounts, Savings

Meet the author

author avatar MatthewA
Matthew is the author of the book Battles of the Pacific War 1941 - 1945. You can find further details at http://battlesofthepacificwar.blogspot.co.uk/.

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