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What are the ten easy ways to save money

Cash kept in a non-interest bearing current account loses its value through the effects of inflation. Savers may transfer funds into savings accounts or other investments. Some money tips are set out below.

Safe investments

An individual savings account (ISA) may be set up in the UK with a financial institution. Up to £10,680 (for 2011/12) may be saved in the tax year in a stocks and shares ISA or in a combination of cash and shares ISAs, where income is earned tax free. National Savings & Investments (NS&I) in the UK offers index-linked five-year savings certificates which ensure that the interest on the savings is adjusted for the rate of inflation. Amounts between £100 and £15,000 may be invested in these certificates. The Post Office offers some NS&I and other investments. Their products include an online saver where money may be withdrawn at no notice and one or two year online bonds which offer a higher rate of interest. Those people who can save over a longer term may consider the fixed interest deposits available from financial institutions. These may be available for periods between one and five years, with an attractive fixed interest rate. People who bank online may transfer cash into an online savings account. These accounts normally offer a slightly higher rate of interest compared to rates offered on other savings accounts. These may be instant access or fixed term accounts.

Riskier investments

Investors considering on ways to save could consider money market deposits, available through banks and some other financial institutions. Returns are attractive, but these deposits may require a high minimum investment. Other money ideas include a stock market linked savings account. This carries a high interest rate if the stock market rises and a lower interest rate if the market has not risen. A high minimum investment may apply. Real estate investment trusts (REITS) are companies that invest in real estate and receive property income and capital gains tax free. Investors may invest in these, but should be aware that prices may fluctuate and sometimes, fall sharply. This can therefore be a rather risky investment. People considering how to save money should consider making pension contributions through their employers if they run a pension fund, or else through a bank. These may give tax relief to the investor and the money in the fund earns income tax free. A riskier way to get more money is to invest in a managed fund, for example, a cautious fund containing shares, bonds and property offered by a bank. These investments may earn high returns over time, but may be subject to sudden downward price movements and drops in value.

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