Stock, shares, national savings account...how do you decide which savings plan or investment is best for you?
2009-05-07
Every day newspapers are full of advertisements trying to persuade you to invest in:
Stocks and Shares
Unit and investment Trusts
Individual Saving Accounts
Bank and Building society Deposit Accounts
National Savings
Unit and Investment Trusts
How do you decide which savings plan or investment is best for you? XEHER Money gives you a brief lowdown on what you need to know to understand your options. You can talk to an independent financial adviser who will act on your behalf to help you make the right decision, or, if you are confident that you know your best course of action, you can invest directly. One thing that cannot be denied is the increasing need for each individual financially to provide for themselves, due to the reduction in some welfare state benefits, especially the basic state pension.
Savings are only part of your overall financial strategy. Before committing to a savings plan, consider the following areas:
Emergency funds: you should have enough money in the bank or building society to ?cushion? you in an emergency ? ideally this should be equivalent to three?s month income.
Life Assurance: if you have dependents (such as children or your partner does not have an income) Life assurance will protect them financially in the event of your death.
Pension and retirement planning: pensions represents one of the biggest tax breaks available, and will give a much-needed boost to the state pension. The earlier you take out a pension, the more it will be worth when you retire.
Disability Pension / Critical Illness / Permanent Health Insurance: these types of insurance are designed to support you financially if you are unable to work because of illness or an accident. Life assurance will not help in these circumstances.
Repaying debts: if you have outstanding loans, check that you are not paying more interest than you would receive from a savings plan. If you have made arrangements for the previous items, now it is time to consider savings.
