Tick-tock goes the investment clock

Wednesday, 01/04/2015

With the end of the tax year fast approaching, now is the last chance to make the most of this year’s ISA allowances. The current annual ISA allowance is very generous with savers able to deposit up to £15,000 per year, but choosing where to put your money for the best return is not easy.

There are always personal factors that will need to be taken into account when it comes to saving money, like what kinds of risks you are willing to take and how long you are looking to invest it for. So where do you put your money?

Stocks and shares

For those not averse to taking a risk or two, the answer could be to invest your money in the stock market. If you are dealing with money that you are looking to use at some point in the next five years, stocks are unlikely to be the answer but if your goals are more long-term, like your retirement, shares can make a lot of sense. 

You will need to play the long game here as, even though shares can bring the biggest reward, there can be periods of volatility that you will need to ride out. 

Verdict: not for the nervous saver but if you have the time and stomach, shares could see the biggest return on your investment.

Cash ISAs

Cash ISAs are the option that most savers will go for as they offer a much better return than leaving the money in a standard bank account. They are also low risk and, in most cases, are accessible should that rainy day arrive earlier than expected. 

There are larger returns available out there if you are willing to lock your money away over a longer term but even if you are not, it’s worth shopping around as there are many deals to be had.

Verdict: the safe option for those who want a solid return with low risk.

Mix it up

The third option is to invest in a mixture of the two. Depending on timescales and available funds, this option might allow you to get the best of both worlds. Beware, however, that this can be complicated to understand and organise, so it is always worth seeking professional help from a financial advisor. 

Verdict: could be the most balanced option for you, but seek professional advice.

Payday loans are not suitable for, and would be expensive as, a means of longer term borrowing and are not appropriate if you are in financial difficulty.

Representative 1269.7% APR

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Warning: Late repayment can cause you serious money problems. For help, go to moneyadviceservice.org.uk