Savings accounts continue to offer low rates of interest, leaving many people wondering whether they are even worth bothering with. Ever since the current low-interest environment bit, savers have been looking at alternative ways to get more from their money. Things may be on the way up, but even headline-making best-buy accounts are only offering a couple of percent.
While savings accounts are pretty much unbeatable when it comes to keeping your money secure, there are some alternatives you might want to consider, whether you have a lot or a little to put aside.
Extra Mortgage or Loan Repayments
This might not seem like the most attractive choice at first, because it means giving up all access to the money you put aside. However, it will usually leave you better off overall than putting your money into savings. Think of your finances like a balance sheet. On one side you have money and assets in your possession, on the other side you have debts. Subtract debts from what you have to get your net worth. Both debts and savings grow over time due to interest rates, and your debts probably grow faster because interest rates are almost certainly higher. By removing a chunk of debt instead of adding a chunk of savings, you are having the same initial effect on your overall “worth,” and having a bigger impact over time because it will reduce the growth of those debts and lead them to be paid off sooner. Even paying a little extra can make a big difference if done regularly over time. Of course, you should still only consider this if you are sure you won’t need that money in the future.
Peer-to-Peer (P2P) Lending
Those with a lot of money are investing in properties to get more out of their money, and those who are clued up on the stock market or have access to professional advice (these also tend to be those with a lot to save) might turn to stocks. Peer-to-peer (P2P) lending, which sees you provide money for a person or business who wants to take out a loan, is another investment option, but this time it is equally open and equally useful for those with small savings and those with large amounts. While all investments carry risks and this is what rightly puts off those who could afford to invest but can’t afford to lose, P2P is very much one of the safer options. It has been rated as not much more risky than a bank, and many of the online platforms offering this service have been designed to make the experience as close as possible to managing a traditional savings account. Various fixed terms are available from a few months to a few years, and the interest rates far exceed anything the banks are offering.