Why Saving Money Is Still a Good Idea – Accounting for Every Penny

Posted on October 24, 2011 by

With the world economy in it’s current state, and as we all wait with anticipation how the european crisis is handled, more than ever, we need to make sure that every penny counts.

So Is Saving Still a Good Idea at the Current Interest Rates?

Even though bank and savings interest rates have taken a nose dive over the past 2 years, there are still an abundance of reasons to tuck away your hard earned salary into a savings account. Average interest rates of savings accounts are now around the 2-3%  mark, and could go down even further in the future.  Inflation also needs to be considered.  It’s good form to regularly put money away each month in case of emergencies. When the interest rates climb back up, you’ll be in a good position to capitalise.

So What are The Options for Saving Methods in The Current Climate?

Cash ISAs give you a tax-free return on your interest, so these are worth considering as an option.  If you’re looking to put away your money for a long term commitment, where you won’t need to touch it, there’s always the alternative of fixed bonds. 1, 2, 3,4 & 5+ years are available to choose from.  These are based on fixed rates, so there is a slight risk of lost gains if interest rates go up, and they also stipulate a minimum amount. Additionally,  short-term fixed rate bonds give you the flexible option if you want to draw after a year – you can then reinvest and benefit from possible rate increases.

There are a number of saving options out there. Take your time, do your research, compare savings accounts and rates with lovemoney to help you make the right choice.