One way of saving that attracts tax benefits (as do pensions) is to take out an ISA. ISA stands for Individual Savings Account, but they are usually called ISAs to rhyme (almost) with Tizer.
They also have some advantages over pension savings schemes:
and some disadvantages:
It makes sense to have some emergency, rainy day, money that you can get at before you tie money up in pension schemes. Some experts suggest that three months' salary is a good rule of thumb, but you may think that you need more or less than this. A cash ISA makes a sensible home for an emergency fund.
There are different kinds of ISAs, and there are rules about how much you can invest each tax year (April to March).
Either you can take out three mini ISAs in a tax year and save up to:
Your mini ISAs can be with different suppliers, so you can shop around.
Or you can take out one maxi ISA (through a single supplier). This can invest no more than £3,000 in a cash component and no more than £1,000 in insurance-linked savings, but can invest up to £7,000 in stock and shares. Normally maxi ISAs are a route to invest in stocks and shares.
You can find out more about ISAs from the tax authorities or the Fincancial Services Authority.
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