Hiya,

I'm in my early 20s and have always been fairly good at sticking to a budget etc and have always ahd a savings account. I'm starting to feel like I'm not really getting the most out of possible interest rates. I've got some money in my savings at the moment but am looking for some advise on a better/faster way to save....I can normally afford to put around £100 a month away.

Can you help?

Thanks, Sophie

Hi Sophie,

First things first, well done for starting now!  Most people, myself included, don't start thinking about this sort of thing until much later in life.

Couple of things to think about.

Cash Savings cushion - It is always good to have a cash fund available in case of emergency.  This should really be the first thing to think about.  Open a mini cash ISA with the best interest rate you can find and start putting your £100 per month away.  You should aim to have 3-6 months salary for those 'just-in-case' situations.  Saving in an ISA will protect your interest from tax which is always advisable when possible.

Longer term savings - These can be a mixture of things...

You may want to start investing in your pension.  I know it is boring and a long, long way away, but the early years really do make a difference.  If your employer matches any of your contributions it would be worth making the most of it.

Investing in the stockmarket.  This is higher risk than cash but over the long term, which being only 20(ish) you can look at, it will beat cash returns.  You might be able to invest through company share save schemes, which offer attractive returns and a cheaper way into stockmarket investing.

If I were you though, I'd concentrate on building up a cash fund.  The rest can come later once you have this safety net in place.

Hope this helps...

That is helpful, thank you for the advise... do you have any recommendations for ISA's? I have one at the moment, I'm just never really sure about what to look for in terms of what is a good interest rate etc...

The best bet is to look at the best buy tables on this site.

The current best rates are around 6.2% but you may want to look at longer term rates if you can't be bothered changing every 6 -12 months.

Direct ISA from NS&I is a great rate at 6.3% but you cannot transfer in your existing ISA savings.

I use the YBS e-ISA as although it is not chart topping, it is continually in the top 5 and passes rate increases quickly if they occur.

By aware though.  If you planb to transfer your existing ISA to another provider, you must let the new provider do the transfer.  If you simply close the old one, you will be using your current allowance to save it again.

Regards,

A.