Plans to suit your finances
Save money through a plan that suits your finances
If you want to put money aside for education, then you can embark upon any number of savings plans which will yield either income, capital or both. So here are some ideas for the kinds of savings schemes that might suit you:
ISAs (Individual Savings Accounts)
With tax-free returns, these investment vehicles allow for up £7,000 a year to be invested. You can invest in a Maxi-ISA or Mini-ISA, but not both in the same tax year.
Maxi ISA
Invest your full £7,000 annual entitlement in stocks and shares which, whilst high-risk, are potentially the highest- yielding.
OR
Mini ISA
Choosing up to three providers, you can spread your annual £7,000 investment, creating a personalised portfolio to match your needs. Your investment spread must be:
- Up to £3,000 a year in stocks and shares
- Up to £3,000 in cash
- Up to £1,000 in life assurance
TESSA-only ISAs
If you have a maturing TESSA (Tax-Exempt Special Savings Accounts), you can re-invest up to £9,000 into a TESSA ISA, in addition to any other ISAs you have - providing it is done within 6 months of maturity. This must be original capital, not any accrued interest.
Other investments
Unit Trusts and Open-Ended Investment Companies (OEICs)
Money placed in a Unit Trust, OEIC is pooled with those of other savers, and the net amount is invested by a professional Fund Manager, usually in the Stock Market
Investment trusts
These are companies that invest in other companies, and are listed on the Stock Exchange. Investment trusts often buy in the services of a specialist fund management company
National Savings and Investments
These offer a wide range of accounts and bonds, such as Children's Bonus Bonds and Pensioner Bonds, which have advantages for higher-rate taxpayers. Rates of return and tax benefits on these savings schemes vary regularly, so it's worth comparing different schemes to find out which would suit you. Available through the Post Office.
Bonds
These can generate handsome profits. Your initial investment may or may not be guaranteed - and returns on your investment may be fixed or linked to current stock market performance:
With Profits Bonds
Offered by insurance companies, money is invested in the insurance company's own With Profits fund. This will then invest in shares, fixed interest stocks, gilts (government bonds) and property.
Guaranteed Income Bonds
Guarantee that your initial investment sum will be paid back in full at the end of the term, during which you will be paid a fixed income. Capital does not increase during the term, but interest rate won't change, irrespective of fluctuations.
Stocks and Shares
Stock markets should always rise, but they often fluctuate, so they should never be regarded as a short-term investment option. If you do play the markets, remember that any loss you sustain is only an 'on paper' loss until you decide to cash in your stocks and shares - so it's always worth waiting until the market improves.
Investment Bond
Can be used for growth or income. Invest in wide range of investment funds, can be stocks & Shares, gilts, corporate bonds, cash etc. Tax advantages for Higher Rate Tax Payers (HRT) who may be Basic Rate Tax Payers (BRT) in future. Not suitable for Non-Tax Payers (NTP) as cannot re-claim tax but it is deducted at source.