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Planning Retirement Online

Where to Put It

If we're looking both to make ends meet but also to have some money left with which to enjoy ourselves in later life, it is essential that we make the most of it in terms of ensuring that it provides the maximum possible income for us.  One of the best ways to get help with personal finances is to get your money working for you!

People of our generation have traditionally kept much of their money in a high street bank current account. The problem with this is that with the non-existent interest rate in these accounts, we actually lose money, in real terms, by keeping money in them. This is another reason for having a budget; so that we know just how much we need to keep in a current account for our day-to-day requirements. We should move all our other money to somewhere that is going to give us a better return.The Rules of Wealth: A Personal Code for Prosperity

Having said that, we can now get better rates for our 'everyday' money. This will help with our personal finances and give us the maximum amount to spend. Internet banking, if we're happy with it, will give us a better rate of return than a traditional current account. With the internet banks, you can have a savings account and a current account, with the ability to switch between the two instantaneously. With the current account, you get a debit card and, if you wish, a cheque book, so it's just like an ordinary current account. Keep your money in the savings account, with its higher interest rate, and just switch it when you want to spend some. Even the current account will give you a much higher rate than a normal high street current account. Have a look at cahoot (the on-line bank owned by Abbey National) or Barclays to get a flavour for internet banking.

Making the Most of our Money links

If you're unhappy about internet banking and would prefer alternative help with your personal finances, then telephone banking is a good alternative. You keep the money in an account that is accessed over the phone and transfer money to your normal current account when you need it. Most of the banks operate a telephone bank and, once again, the interest rate is  better than an ordinary current account.

You can also shop around at organisations such as the Halifax and Santander for their current accounts. There is a whole range of offers for current accounts that give a decent rate of interest. Those which offer higher rates usually have some strings attached such as having to save so much each month and/or keeping a minimum balance in them. Some of the more traditional banks offer current accounts that provide, for example, free travel insurance and AA membership, providing you keep a minimum balance in them. Sometimes you have to pay so much a month in order to get these perks. Look at LloydsTSB for an example of these type of accounts.

Whichever route you choose to help with personal finances, shop around so that you get the best deal for yourself. Read the financial press and go online to websites such as moneysavingexpert.com and moneysupermarket.com to compare the rates of interest. Ask your friends if they have money in a good current account and, of course, talk to these organisations in person - providing you're confident you can resist the sales pitch!

'One thing you can also do is to invest in a cash ISA. This is where you can put up to up to £20,000 (2017/18 tax year) per person per annum into a savings account in which all the interest is tax-free. All the organisations mentioned above, other than Cahoot, provide them as do many other companies; you just have to choose which one to use. Some of them are instant access, so they're just like a tax-free current account, others require notice when you wish to withdraw some money, whilst others are for a fixed term such as one, two, three or four years'.

The Money Tree: Money, how to make it, save it and grow itMoney that you don't need for your everyday spending, but which you plan to spend over the next five years, you can afford to put in areas where you can't access it immediately or where there's a fixed term. This is money for major expenditure such as new furniture, replacement white goods and so on. You might already have the money but don't want or need to spend it yet or you might need to save it. Either way, you need your money to work for you, to help with your personal finance.

 So an ISA, which we have talked about already, is a good vehicle for this money. However, if you have more than the up to £20,000 (2017/18 tax year) in a tax year to put away then put the money in areas where you have to give notice to get at it or where there is a fixed term, in return for which you get a higher rate of interest, sometimes tax free. Again, most of the major financial organisations offer these type of accounts so shop around to get the best rates.

National Savings also falls into this category, through which you can get fixed term savings certificates or bonds. The certificates are for different fixed terms, up to five years, whilst the bonds are either income or savings bonds. National Savings even does ISAs! In some National Savings products, the interest is tax free.

 There are also many other bonds available, from commercial organisations such as the banks. If you want to look at these, go to Moneyworld, which offers many bonds at a discounted price.

The other aspect of National Savings is Premium Bonds. These are almost instant access (you can redeem them in as little as two weeks) and your money is at no risk. What is at risk is the interest you would have got if you had put the money somewhere else. The gamble is that you might win one of the many prizes that are on offer - including the two £1million prizes each month!

The Financial Times Guide to InvestingFinally, once you have catered for today and your planned expenditure over the next five years, you might consider making some investments in order to help your personal finances. However, you must always remember that, whilst you can get potentially higher returns for your money, you might also lose it, because for any investment there is a risk. Investments can go down as well as up, which is why you should be prepared to keep them for at least five years and it should be money that, in theory at least, you can afford to lose.

Bearing that in mind, a good place to invest money is with a Share ISA. This is an ISA through which your money is invested in the stock market and all the growth, or profit, is tax free. (For current ISA limits visit gov.uk.) You can invest in one single share or in a range of shares that will be managed for you by the company with which you invest. Again, all the major financial institutions will offer share ISAs or you can do it yourself if you go to selftrade.com.

You can also invest in individual stocks and shares, property, bonds, unit trusts or gilts. However, before you consider doing any of this, you should seek professional advice. Click on Getting Financial Help for some ideas about how to go about this. You could also collect things. People collect all sorts of things: wine, whisky, art, furniture, china, porcelain, stamps etc etc. Very often it's associated with a hobby, so they get pleasure out of the collecting, but the objective is for the investment increases in value so that it can be sold at a profit.

So making the most of our money by putting it in the most appropriate and advantageous places to suit our needs requires some thought. However, you can get help with this aspect of your personal finances through sources such as the financial press and the internet. Use those sources, shop around and get the best deals that are on offer.

For other ways through which you can help make the most of your personal finances, click on the links in the box to the other pages of this Guide.

This Guide is written by Retirement Specialist Dave Sinclair supported by members of the LaterLife team. As well as writing on retirement matters Dave is Training Director at LaterLife and responsible for the content and continuous improvement of LaterLife's Retirement Courses.
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