With interest rates so low it’s important to start investing your cash to attract higher returns. Here are a few ways to put £10,000 worth of savings to work.
Using an Investment Fund
Investment funds are an easy, hands-off approach to managing your investments. These are long-term schemes, where a professional investment manager will decide where to direct your savings, for a fee. In general, funds will invest in shares. Over a long enough period, your savings can be expected to rise by a decent amount – the most popular type of fund among small investors, equity income funds, have an average return of about 8% a year, while funds as a whole average about 6.5%. Compared to the interest you’d get from a savings account, that’s a significant potential return.
Making the Most of Tax Efficient Investment Schemes
There are a number of ways to earn tax relief on your investments. For example, you can use your Stocks and Shares or Innovative Finance ISA (IF-ISA) allowance to invest as much as £20,000 in the current tax year without paying income tax on the returns generated.
You can also take advantage of the Enterprise Investment Scheme (EIS) and Seed Enterprise Investment Scheme (SEIS) to claim tax relief when investing in small businesses and start-ups. The schemes provide income tax relief at 30% of the value of the shares for EIS and 50% for SEIS.
Using Crowdfunding and Alternative Finance
Crowdfunding lets you invest in innovative start-ups and privately-owned companies, because you can get in early, before they begin publicly trading, you could make significant returns if you choose a small business which becomes a success. For example at Crowd for Angels you can invest online in exciting small businesses for yourself, with the potential for lucrative rewards down the line.
Property investment with fixed returns
A number of property development companies are now offering high yield, fixed interest investment opportunities. The investment is pension approved, asset backed and offers a flexible exit strategy. One of the most successful of these plans is operated by Imperial Corporate Capital PLC.