There are several ways you could choose where to keep your savings, depending on your goals. It’s important to do some research to make the right choices for your circumstances. You may wish to consult a financial adviser to help you with this – there’s likely to be a cost for advice.
Here are a few examples of where you could put your money:
Easy-access savings account
This is a bank account where you can access your money as and when you need it. In terms of savings, this is where people might choose to put their rainy-day fund, so they can take money from it in case of emergency.
If you’re saving for retirement, you might choose to direct some of your savings into your pension. Depending on your provider, you might be able to make one-off payments into your pension pot or set up regular additional payments. You may also be able to instruct your employer to increase your pension contribution before you get paid. This means your take-home pay would be less, as you’ll be redirecting some of your earnings into your pension pot.
Remember that your pension pot is an investment. The value of your pension can fall as well as rise and isn’t guaranteed – you may get back less than you paid in.
General Investment Account (GIA)
A GIA works similarly to an investment ISA, except there’s no limit to how much you can invest within a single tax year. There are no restrictions on when you can access your money in a GIA, although you should be prepared to hold your investments for at least five years, ideally longer.
Any dividends in excess of your tax-free dividend allowance will be subject to income tax, whether the dividends are reinvested or paid to your cash account. Any interest distributions you receive over your personal savings allowance will be subject to income tax.
If you sell an investment, any growth may be subject to Capital Gains Tax (CGT), if you exceed your annual CGT exemption. The amount of tax you will pay will depend on your personal tax situation and may be subject to change in the future.