Once you’ve saved your emergency fund, it’s time to start growing your money! Perhaps you’re ready to save for a specific goal, or just want to get your money working harder. But, with so many different accounts out there, it can be hard to know which one is right for you. Let’s get into it!

 

For short-term goals, use cash savings

If you think you’ll be dipping into your savings within the next five years, cash savings accounts are a great way to get your money working harder. You’ll grow your money by earning interest on the money you save. The Personal Savings Allowance allows basic-rate taxpayers to earn up to £1,000 in savings interest without paying tax!

Find a savings account with a competitive interest rate and choose whether you want an easy access savings account, a notice savings account, a fixed-rate savings account, or a Cash ISA. Here’s a quick breakdown.

 

Easy access savings accounts, like the Moneybox Simple Saver

  • The most flexible type of savings account
  • Get quick access to your money 
  • Limits the number of withdrawals you can make (for example, max one withdrawal per calendar month)

 

Notice savings accounts

  • Usually offer higher interest rate than easy access accounts
  • In return, you need to give notice to withdraw your money
  • Notice periods are usually between 30 days and 100 days

 

Fixed-rate savings accounts

  • Lock in an interest rate for a set time period – for example, five years
  • Your money is also locked away for that time period 
  • You can’t withdraw money or switch accounts during the fixed term

 

Cash ISAs, like the Moneybox Cash ISA

  • A type of ISA – counts towards your £20,000 annual ISA allowance
  • Interest earned is completely tax-free
  • Cash ISAs can be easy access or fixed-term
  • Interest rate subject to conditions

Heads up! If inflation (the rate at which the cost of goods and services is increasing) is higher than your interest rate, your money is losing “purchasing power” over time, meaning it will buy you less in the future.

Learn more about inflation and how it affects your savings and investments

 

Saving for your first home? Meet the Lifetime ISA

Lifetime ISAs are designed to help you save for your first home, but they can also be used to save for retirement. You get a generous 25% government bonus on top of all savings. For every £4 you save, you’ll get £1 for free! You can contribute up to £4,000 per tax year, which is included in your total £20,000 ISA allowance. So, you could earn as much as £1,000 for free every tax year, just for saving money in the account. 

With Moneybox, you can choose between a Cash Lifetime ISA, which earns you a competitive interest rate on top of your savings and bonuses, or a Stocks & Shares Lifetime ISA, where your first home or retirement savings are invested in the stock market. 

A government withdrawal charge may apply – read more on this below. When investing, your capital is at risk.

 

For long-term goals, it’s best to invest

If you’re happy to put your money away for five years or more, investing is likely to give you higher returns than a cash savings account. Not only does your money have time to bounce back from any short-term market fluctuations, it’ll also benefit from compounding. Compounding means you’ll earn gains on your original investment, plus gains on your gains – and so on. These amounts can build up exponentially over time! We go into this in more detail in Step 4 – Invest like the best.

If you want to build your wealth through investing, these are the two main accounts to know.

 

Stocks & Shares ISAs, like the Moneybox Stocks & Shares ISA

  • A type of ISA – counts towards your £20,000 annual ISA allowance
  • The gains you make are completely tax-free
  • Choose your level of risk and customise your allocation to invest in stocks and funds
  • When investing, your capital is at risk

 

General Investment Account, like the Moneybox General Investment Account

  • An easy way to invest – all you need is a UK bank account
  • Great option if you’ve already used up your £20,000 ISA allowance
  • You pay tax on gains above £6,000 – less generous than an ISA
  • When investing, your capital is at risk

 

Other great ways to grow your money

Junior ISAs (JISAs), like the Moneybox Junior ISA

  • Designed to help parents or guardians save for a child
  • Save or invest up to £9,000 per tax year on top of your personal ISA allowance
  • Matures into a Stocks & Shares ISA when the child turns 18, then only they can access it
  • When investing, your capital is at risk

 

Self-invested personal pensions (SIPPs), like the Moneybox Pension

  • Gives you more control over your investments than other pensions
  • Earn tax relief on your contributions – essentially free money!
  • Find and consolidate old pension pots for easier management
  • Pension and tax rules apply

 

When you’re choosing which goal to tackle first, and which account will help you grow your money, think about your savings and investments like a champagne tower. Once the top glass is full – start filling up the next!

 

Important to know

You can contribute up to £20k across all ISA products in a single tax year.

All investing should be long term (min. 5 years). The value of your investments can go up and down, and you may get back less than you invest. Please note, before making any changes, make sure you’re comfortable with the risks associated with each fund and have considered the impact this might have on the risk and return level of your portfolio.

As with all investing, the value of your pension can go up and down, and you may get back less than you invest. Tax treatment depends on individual circumstances and is subject to change. Payments you make into your pension won’t be accessible until the minimum pension age (currently 55, increasing to age 57 from 2028).

Interest is accrued daily and paid into your account yearly on the date you opened your Cash ISA. The rate is variable and we’ll inform you if it changes.

The Simple Saver account lets you withdraw once per calendar month.