3 Hassle-Free Ways to Make Money from Savings
More often than not, there are hassle-free ways you can earn interest from savings. Despite what people think, there is plenty of opportunities to make some extra cash from having your savings about. If you’re fed up with low-interest rates on your current savings account, it may be time to think of more exotic ways to pick up a better return. Predictions around interest rates show that they won’t rise for another two or three years, so it’s hardly surprising you want to find a new way to make money. However, what are the most effective ways? There are risks in everything you do, but how do they impact the overall return made on savings? Even if you’re typically someone who likes to play safe and leave your money in a fully protected account, there may be something you can do to earn more.
Put Your Cash into a Lifetime ISA
A lifetime ISA could give you upwards of £30,000 for free towards your first home or retirement. Since the launch of the lifetime ISA in 2017, more and more people have been making use of this money-making tool. It allows those between 18 to 39 to save up to £4,000 a year, and the state then adds a bonus of 25% on top. This means you could potentially be receiving £1,000 free cash annually. The interest you gain on the ISA is tax-free. Once you’ve opened it, you’re not locked in either, as you’re free to transfer it to another provider. It is one of the easiest and most effective ways to make a return on your savings. Plus, you’re not limited to an amount or timeframe. However, keep in mind that once you start contributing, you can only withdraw the cash towards a first home, or when you’re 60.
Invest in Property
Those of you who have a lump sum of savings collecting dust in a low-interest account may want to take that money and put it into a property. The property market is a safe and reliable investment that you can make a lot of return on. It may be that you want to sell on a property after renovating it, or you want to try investing in a newer buy to let development. RW Invest is a buy to let specialist investment company. They can advise first-time investors of the best locations with high demand and good rental yields to ensure the return you wish for. Plus, when you retire and no longer want to rent out your property, you have the option to sell it. This could lead to vast amounts of capital appreciation as city centres continue to gain momentum in the property market.
Use Fixed-Rate Bonds
These fixed-rate bonds have the highest rates of interest that banks and building societies offer. The capital is guaranteed, and the rates can be attractive to those who want to make money from their savings. The longer you’re willing to lock away your money, the better the rate you’re going to receive. Those who only commit to 1 year will see interest rates of around 3.5% (depending on the bank), whereas those who want to commit to 5 years could get upwards of 4.65% interest rate. This is a large amount of extra interest if you have a significant amount of savings to invest.
Additionally, it is covered by the FSCS which covers you for up to £85,000 per person per firm. However, a drawback you may want to consider is that there are early withdrawal charges. If interest rates bounce back to their historic lows, you may be stuck with a low rate of interest account.