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High interest saving accounts may not be the best for an investor but offers diversification and risk free mechanisms for creating wealth. These provide constant growth at the rate of compound interest. In the year 2017-2018, the number of new cash Isa accounts reduced in the UK in comparison to 2016 -2017, as per the latest statistics of HMRC. High rates are offered on the fixed rate account but it locks money for the specific duration that varies from one to five years.
Saving account vs. stock and shares Isa
Some investors shift to stock and shares Isa as it provides tax-free income but the total allowance for the year is £20,000. One can move account from cash Isa to stocks and shares or diversify in the two. The returns on such stocks and shares Isa was up to 13 per cent in 2017 and 16.6 –per cent in 2016, but in the earlier years i.e. 2014 and 2015, the returns were less than 1.1 per cent, while, in 2013 the growth was more than 20 per cent.
Investing in stocks and shares Isa can provide variable returns but if the stock market shows negative growth –earnings may reduce. Further, returns are not related to the number of years of investment; rather, it can provide highly volatile returns. The risk factors of investment in stocks and shares Isa include climatic issues, political changes and economic crashes. These are unpredictable events making it highly risky investment.
Saving account or fixed rate account provide predictable regular income. Many saving accounts offer rates better than cash Isas but the investment has to be made for a year at least. Diversifying in leading fixed rate saving accounts can get 0.39 per cent more than cash Isas. The rates vary in the range of 2 to 3 per cent on money saved for 2 to 3 years. The earnings from such saving accounts are not tax free as in cash Isa. Basic tax payers are allowed saving up to £1,000 per annum, and higher tax payers are allowed to save £500 per annum.
Creating high yield bank accounts online
Alternatively, one can invest in high interest current accounts, where some of the deposits yield more than 4 per cent interest per annum. E.g. TSB Plus account and Tesco Bank offers 5 per cent on min. deposits £1,500, and 3 per cent AER on deposits £3,000 respectively. In TSB one has to deposit min. £500 a month, and in Tesco Bank account, one has to deposit min. £750 a month.
There are many overseas banks offering saving accounts with zero minimum balance. Some online banks offer high yield saving account such as Goldman Sachs pays up to 1.85 per cent APY on deposits and min. balance required to open the account is $1.
Synchrony is another bank, which offers saving account and also an ATM. It pays interest 1.85 per cent.
To find out more about High Interest Savings Accounts, click 99 Alternatives at (http://www.99alternatives.com).
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