07:19 27 January 2014
It is never too late or difficult to start saving for your future or the unexpected financial burden, if you know how.
There are a lot of free tax savings products that financial organisations offer for people who want to save for specific reasons as well as for those who like planning for a rainy day. Every cent saved and every interest earned on a tax savings plan is paid to you. That should appeal to anyone who is serious about saving and managing their money well.
Advantages and disadvantages of Tax free Savings Accounts
The first thing to consider when choosing a savings plan is to work out how much money you are willing to invest. There are advantages and drawbacks to every savings product, so you need to do due diligence on savings products as well as the institutions that are offering tax savings plans.
1.Individual Savings Accounts: This type of plan is uncomplicated, offers great interest rates and enables easy access to your money when you need to withdraw some funds from the account. The one drawback of the Individual Savings Account is the subscription limit, which dictates how much you can put into an account on an annual basis.
2.Savings Certificates: The Treasury's National Savings and Investments (NS&I) offers savings certificates that enable you to save money for two to five years tax free.
3.Personal Pension Plans: Pension plans have always been the safest way to make sure that you have financial security when you stop working. The details of saving money into a personal pension plan may vary but one thing is constant, you get a completely tax free lump sum when you are pensioned off.
It is always a good idea to consult with a professional financial adviser. They will be able to identify the right tax savings plan for you to suit your individual situation.