Posts Tagged ‘Savings Account’
Got Savings? Using an Offset Mortgage to Make them Work Harder
Its good to know that in the face of global financial meltdown and credit crunches, figures show more Brits are saving more. If you are one of these people who have gone against the credit trend and saved rather than spent, why dont you make the most of all that hard work and offset the savings against your home loan with an offset mortgage?
If you have your savings in a high interest account, they will be making you money and thats great. But its never enough is it? After tax, that interest doesnt seem worth it, and it inevitably gets spent a lot more quickly than it was accrued. So use the money and make the most of it with an offset mortgage and take advantage of the security you have built up to make some massive savings.
What is an offset mortgage? Well, essentially an offset mortgage is one that allows the borrower to put any money up against the mortgage. So you would only owe the interest of a 80,000 mortgage if you had a 100,000 mortgage with 20,000 offset against it, for example. So the more you offset, the less you pay each month.
But whats wrong with just investing the savings into the property and take out a smaller, regular mortgage? Well that is a perfectly valid way to invest your money, but the money is then tied up in the property, locked away. With an offset mortgage, the money is still there for you to spend if needs be and so no need for secured loans or remortgages in the future. Its a security, not an investment.
Not only are the savings as accessible as they would be in your regular savings account, but the interest made in the offset mortgage account does not accrue interest, so is not taxed. Interest accrued in regular accounts is deemed earnings by the taxman, so up to 40 percent of it is fair game – but as the savings are a security against your property, the interest bypasses that law, so you dont owe a penny. With an offset mortgage, you dont pay tax – you just save money.
There is also no reason why you cannot add other accounts to your offset mortgage and add your current accounts to top up the security and double the repayment savings. Also, you can add credit card balances onto the current account, slashing a few percent points from any repayments on that debt.
An offset mortgage is the perfect way to make money without lifting a finger, the debt amount drops, the rate drops and hopefully if your house price rises, you will own more and more of your home. And as you save on the mortgage, you will have more left over at the end of the month so why not save that too? Soon, the savings will start to stack up and the mortgage payments will diminish.
An offset mortgage is the perfect choice for those looking to let their savings do a bit more work for them. And why shouldnt they? You invested your own hard work into saving in the first place.
By: Elizabeth Grant
About the Author:
If you have your savings in a high interest account, they will be making you money and thats great. But its never enough is it? After tax, that interest doesnt seem worth it, and it inevitably gets spent a lot more quickly than it was accrued. So use the money and make the most of it with an offset mortgage and take advantage of the security you have built up to make some massive savings.
What is an offset mortgage? Well, essentially an offset mortgage is one that allows the borrower to put any money up against the mortgage. So you would only owe the interest of a 80,000 mortgage if you had a 100,000 mortgage with 20,000 offset against it, for example. So the more you offset, the less you pay each month.
But whats wrong with just investing the savings into the property and take out a smaller, regular mortgage? Well that is a perfectly valid way to invest your money, but the money is then tied up in the property, locked away. With an offset mortgage, the money is still there for you to spend if needs be and so no need for secured loans or remortgages in the future. Its a security, not an investment.
Not only are the savings as accessible as they would be in your regular savings account, but the interest made in the offset mortgage account does not accrue interest, so is not taxed. Interest accrued in regular accounts is deemed earnings by the taxman, so up to 40 percent of it is fair game – but as the savings are a security against your property, the interest bypasses that law, so you dont owe a penny. With an offset mortgage, you dont pay tax – you just save money.
There is also no reason why you cannot add other accounts to your offset mortgage and add your current accounts to top up the security and double the repayment savings. Also, you can add credit card balances onto the current account, slashing a few percent points from any repayments on that debt.
An offset mortgage is the perfect way to make money without lifting a finger, the debt amount drops, the rate drops and hopefully if your house price rises, you will own more and more of your home. And as you save on the mortgage, you will have more left over at the end of the month so why not save that too? Soon, the savings will start to stack up and the mortgage payments will diminish.
An offset mortgage is the perfect choice for those looking to let their savings do a bit more work for them. And why shouldnt they? You invested your own hard work into saving in the first place.
By: Elizabeth Grant
About the Author:
Elizabeth Grant writes exclusively for The Mortgage Broker Ltd specialist mortgage websites. To read more articles from Elizabeth on offset mortgages explained please visit the Offset Mortgage Centre.
Painless Money Saving Techniques That Helps Us Grow our Money Tree
“Money doesn’t grow on trees” is a statement the majority of us have heard at one point in our lives or another. The practical application of this quote is that we should consider money something significant in our life and make decisions based upon that fact. Face it, we all have good intentions when it comes to money but few of us do what we intended to do.
We told ourselves we would follow a budget, apply extra cash to debt or save it; and we didn’t do it or did not do it as often as we should have. What happened? Why did we fail to save money? For most the answer is we tricked ourselves into believing that since we had this small nest egg in savings that we no longer needed to focus on building out the “nest” and adding more nest eggs to our proverbial financial basket.
To help us do what we should be doing in the area of savings, an instant savings account may be a wise choice. Money is automatically deducted from our checking account and applied to our savings account on a particular day of each month and we do not even have to think about much less miss the money that is being transferred.
This is the “out of sight” method of savings as if it is out of sight, it is out of mind; we forget about it and let it grow. While it would be nice if we, as consumers, could keep our commitment to depositing a check consistently to our savings account but most of us can’t – we get sidetracked and fail to do what we said we would do and what we know we should do. Instant savings accounts removes that deposit responsibility by establishing the guidelines once and then just letting the automated process do the rest. With this process, we learn to live on less and in turn, save more.
If you are a person who would put of saving until the next paycheck or the next tax refund, an instant savings account is what you need to begin growing your own money tree that eventually you will be able to reap the financial benefits from and enjoy these benefits immensely. Talk to your local banker and see what they offer in this area of savings and whether this sort of savings account is right for you.
When it comes to understanding savings accounts and interest options a wise consumer will study, learn and plan so that they earn as much as they can with any savings account investment. In this information age, there is a lot of options for increasing your knowledge base. Check the links below for more information on Instant Savings Accountand other related information.
By: Charley Hwang
About the Author:
We told ourselves we would follow a budget, apply extra cash to debt or save it; and we didn’t do it or did not do it as often as we should have. What happened? Why did we fail to save money? For most the answer is we tricked ourselves into believing that since we had this small nest egg in savings that we no longer needed to focus on building out the “nest” and adding more nest eggs to our proverbial financial basket.
To help us do what we should be doing in the area of savings, an instant savings account may be a wise choice. Money is automatically deducted from our checking account and applied to our savings account on a particular day of each month and we do not even have to think about much less miss the money that is being transferred.
This is the “out of sight” method of savings as if it is out of sight, it is out of mind; we forget about it and let it grow. While it would be nice if we, as consumers, could keep our commitment to depositing a check consistently to our savings account but most of us can’t – we get sidetracked and fail to do what we said we would do and what we know we should do. Instant savings accounts removes that deposit responsibility by establishing the guidelines once and then just letting the automated process do the rest. With this process, we learn to live on less and in turn, save more.
If you are a person who would put of saving until the next paycheck or the next tax refund, an instant savings account is what you need to begin growing your own money tree that eventually you will be able to reap the financial benefits from and enjoy these benefits immensely. Talk to your local banker and see what they offer in this area of savings and whether this sort of savings account is right for you.
When it comes to understanding savings accounts and interest options a wise consumer will study, learn and plan so that they earn as much as they can with any savings account investment. In this information age, there is a lot of options for increasing your knowledge base. Check the links below for more information on Instant Savings Accountand other related information.
By: Charley Hwang
About the Author:
For more information on Instant Savings Account or visit http://www.easysavingsaccounts.com, a popular website that offers information on Savings Accounts.
Choosing A Saving Account
A savings account is one way of investing money so a person who wants to try this method should make sure he gets the most benefit from it through a high interest rate.
Saving Accounts are, for some of us, the most important financial background and security, high interest saving accounts can prove to be a very wise choice when selecting an account.
The high interest saving account can supply a wise investor with a very nice profit in the end of a long term investment, this is particularly true when talking about the small investors that are looking for a reliable plan to put their money in and hopefully make a little more by getting a reasonable interest rate.
A person who has some money stashed away somewhere in the bank is lucky. Having some savings may be one of the most sought after conditions of every person but it is usually difficult to achieve because of the regular and unexpected expenses a person is faced with everyday.
Anyone who has extra money would be better off having some savings account in any bank. This means he has something to hang on to when the going gets rough for him financially.
The proper budgeting formula should be income less savings equals expenses. However, the economy has become so bad these days that people follow a different formula and that is income less expenses equals savings.
High interest savings accounts are the most sought after type of savings account because this is how people make money out of their savings. However, the very basic savings account can only yield an interest rate of less than four percent of the total amount deposited.
This is good for people who have meager amounts stashed in their savings accounts. A person who has more money in his hands should take advantage of a savings account that has a higher interest rate and this is offered by some banks under a limited withdrawal scheme.
There are banks that offer as much as six percent interest rates for their savings provided the depositor do not withdraw from such funds for a certain period. However, this option is open only to individuals and not to corporations or business with higher amounts to deposit. Most transactions involving high interest savings account are however made online. Thus, a person who saves his money in such an account should do prior research on the bank and make sure that the bank has a good online facility.
When thinking about taking a step towards some financial planning it is always recommended that you choose from a few offers, and that you study the market and the competition thoroughly, do not give away your money too quickly and too soon, make sure you understand everything there is to know about the saving account you choose.
By: David Evermon
About the Author:
Saving Accounts are, for some of us, the most important financial background and security, high interest saving accounts can prove to be a very wise choice when selecting an account.
The high interest saving account can supply a wise investor with a very nice profit in the end of a long term investment, this is particularly true when talking about the small investors that are looking for a reliable plan to put their money in and hopefully make a little more by getting a reasonable interest rate.
A person who has some money stashed away somewhere in the bank is lucky. Having some savings may be one of the most sought after conditions of every person but it is usually difficult to achieve because of the regular and unexpected expenses a person is faced with everyday.
Anyone who has extra money would be better off having some savings account in any bank. This means he has something to hang on to when the going gets rough for him financially.
The proper budgeting formula should be income less savings equals expenses. However, the economy has become so bad these days that people follow a different formula and that is income less expenses equals savings.
High interest savings accounts are the most sought after type of savings account because this is how people make money out of their savings. However, the very basic savings account can only yield an interest rate of less than four percent of the total amount deposited.
This is good for people who have meager amounts stashed in their savings accounts. A person who has more money in his hands should take advantage of a savings account that has a higher interest rate and this is offered by some banks under a limited withdrawal scheme.
There are banks that offer as much as six percent interest rates for their savings provided the depositor do not withdraw from such funds for a certain period. However, this option is open only to individuals and not to corporations or business with higher amounts to deposit. Most transactions involving high interest savings account are however made online. Thus, a person who saves his money in such an account should do prior research on the bank and make sure that the bank has a good online facility.
When thinking about taking a step towards some financial planning it is always recommended that you choose from a few offers, and that you study the market and the competition thoroughly, do not give away your money too quickly and too soon, make sure you understand everything there is to know about the saving account you choose.
By: David Evermon
About the Author:
Saving accounts can be an extremely good way of keeping your moneys worth. Learn about how to set up your High Interest Saving Account at Saving Account Pages.
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Should you Open a Savings Account?
If you have a current account and you are starting to earn more than you spend each month, then maybe it is time to get a savings account. Even if you cannot save a lot of money, putting some money aside each month into a savings account can be a good idea. If you are unsure whether to open a savings account then here are some tips to help you decide:
Money is safer
If you are keeping money that you have saved in your house or room, then your money is not totally safe. If you lose the money, or if it gets stolen or damaged, then you have lost the money for good. If you keep your money in a savings account then your money is protected until you want to use it. If you want your money to be safe from loss or damage then open a savings account.
You will make money
Keeping money in your current account will make sure it is safe, but the money you have will remain the same. Putting that money in a savings account will help you to make money on that amount of cash. That is because the interest rates on savings accounts are much better than the rates for current accounts. Even a small amount of money will increase slowly to something a little larger. It makes sense to open a savings account in order to make money from your cash.
Avoiding temptation
Another good reason to get a savings account is to avoid the temptation of spending your money. If you try and keep a little bit of money each month in your current account, it is likely you will go and spend it on something because it is easily accessible to you. Savings accounts are not as easy to access, and therefore you are much less likely to spend the money. This will help you be more disciplined and save some money that could help you in the future.
Savings for emergency
Although opening a savings account might seem like you are locking away some of your money, you will be happy about this if an emergency arises. No one can know what will happen from day to day, and something may come up that requires some extra cash. If you have been using a savings account then you know that should such an emergency arise you have some money to use. Using a savings account for those unexpected emergencies can really help you out when times are tough.
When not to save
Although opening a savings account makes real sense, there are times when savings is not such a good idea. When interest rates are low the amount you make on your savings is low, so buying items at this type is a better way of using your money. Also, if you are in debt it is better to pay off your debts first than use the money for savings. However, even if you can only afford to save a little bit each month after all your bills are paid, it is worth putting aside that money. You never know when you might need it in the future, and putting it in a savings account will mean it is there for you as insurance.
By: Peter Kenny
About the Author:
Money is safer
If you are keeping money that you have saved in your house or room, then your money is not totally safe. If you lose the money, or if it gets stolen or damaged, then you have lost the money for good. If you keep your money in a savings account then your money is protected until you want to use it. If you want your money to be safe from loss or damage then open a savings account.
You will make money
Keeping money in your current account will make sure it is safe, but the money you have will remain the same. Putting that money in a savings account will help you to make money on that amount of cash. That is because the interest rates on savings accounts are much better than the rates for current accounts. Even a small amount of money will increase slowly to something a little larger. It makes sense to open a savings account in order to make money from your cash.
Avoiding temptation
Another good reason to get a savings account is to avoid the temptation of spending your money. If you try and keep a little bit of money each month in your current account, it is likely you will go and spend it on something because it is easily accessible to you. Savings accounts are not as easy to access, and therefore you are much less likely to spend the money. This will help you be more disciplined and save some money that could help you in the future.
Savings for emergency
Although opening a savings account might seem like you are locking away some of your money, you will be happy about this if an emergency arises. No one can know what will happen from day to day, and something may come up that requires some extra cash. If you have been using a savings account then you know that should such an emergency arise you have some money to use. Using a savings account for those unexpected emergencies can really help you out when times are tough.
When not to save
Although opening a savings account makes real sense, there are times when savings is not such a good idea. When interest rates are low the amount you make on your savings is low, so buying items at this type is a better way of using your money. Also, if you are in debt it is better to pay off your debts first than use the money for savings. However, even if you can only afford to save a little bit each month after all your bills are paid, it is worth putting aside that money. You never know when you might need it in the future, and putting it in a savings account will mean it is there for you as insurance.
By: Peter Kenny
About the Author:
Peter Kenny is a writer for The Thrifty Scot.
Please visit us at Savings Accounts and Earning Interest In A Savings Account
Visit http://www.thriftyscot.co.uk
Planning Your Savings
This Week I have posted some articles on creating a financial plan, net worth planning, and budgeting and cash flow. Carrying on with this theme, my next topic of discussion is the subject of planning your savings.
The net worth statement and cash flow statements are not the primary goals. These statements are there to help you plan how you are going to achieve your financial goals. They are used to help convert vague aspirations of retirement, home ownership, and vacations into clearly stated objectives. Net worth, cash flow, savings, and debt planning helps you convert your aspirations into objectives.
Planning your savings begins with your net worth planning. Your net worth statement shows where you are now and your annual savings will contribute to you achieving your net worth goals.
Set Your Overall Savings Goal
Your savings plan should start with general savings strategies that increase your household net worth: increase your assets (i.e. increase your savings and investments), decrease your debts, or some combination of these two options. Thus you should consider your savings plan in both debt reduction and asset accumulation.
You can use a savings goal setting worksheet to help you identify how much you need to save to realize your goals and helps you commit a portion of your income to achieve these goals.
Example Savings Goal Setting Worksheet
Goal Amount Needed Number of months needed to save Expensed return on savings Monthly savings needed
Vacation $5,000 12 3.5% $410.02*
*Future value of an annuity
$5,000 = PAYMENT x [ ( 1 + 3.5% / 12 )12 - 1 ] / 0.035 / 12
PAYMENT = $410.02
In this example, assume you want to take a short vacation 12 months from now and you estimate the cost will be $5,000. If you place your money in a short term savings account paying 3.5% (after-tax), you will need to save $410 per month to save enough money to go on vacation.
If you complete the worksheet for all of your anticipated future spending and investments, you’ll have an idea of how much you will need to save. Some common items that would appear on the worksheet include:
• Down payment for a home
• Appliances
• Retirement
• Education
• Vacations
• Major appliances
What Happens If My Savings Aren’t Enough?
If your savings are enough, you need to make some changes. Even if your savings are enough, you can still make changes to your plan to better position your self in the future.
PAY YOURSELF FIRST! Treat your savings as a fixed expense and ensure your own financial security. This will help you avoid going into debt if there is an unforeseen future expense (such as a major appliance replacement). Paying yourself first and saving will also help you address cash flow problems identified in your cash flow planning.
By: Dean Paley
About the Author:
The net worth statement and cash flow statements are not the primary goals. These statements are there to help you plan how you are going to achieve your financial goals. They are used to help convert vague aspirations of retirement, home ownership, and vacations into clearly stated objectives. Net worth, cash flow, savings, and debt planning helps you convert your aspirations into objectives.
Planning your savings begins with your net worth planning. Your net worth statement shows where you are now and your annual savings will contribute to you achieving your net worth goals.
Set Your Overall Savings Goal
Your savings plan should start with general savings strategies that increase your household net worth: increase your assets (i.e. increase your savings and investments), decrease your debts, or some combination of these two options. Thus you should consider your savings plan in both debt reduction and asset accumulation.
You can use a savings goal setting worksheet to help you identify how much you need to save to realize your goals and helps you commit a portion of your income to achieve these goals.
Example Savings Goal Setting Worksheet
Goal Amount Needed Number of months needed to save Expensed return on savings Monthly savings needed
Vacation $5,000 12 3.5% $410.02*
*Future value of an annuity
$5,000 = PAYMENT x [ ( 1 + 3.5% / 12 )12 - 1 ] / 0.035 / 12
PAYMENT = $410.02
In this example, assume you want to take a short vacation 12 months from now and you estimate the cost will be $5,000. If you place your money in a short term savings account paying 3.5% (after-tax), you will need to save $410 per month to save enough money to go on vacation.
If you complete the worksheet for all of your anticipated future spending and investments, you’ll have an idea of how much you will need to save. Some common items that would appear on the worksheet include:
• Down payment for a home
• Appliances
• Retirement
• Education
• Vacations
• Major appliances
What Happens If My Savings Aren’t Enough?
If your savings are enough, you need to make some changes. Even if your savings are enough, you can still make changes to your plan to better position your self in the future.
PAY YOURSELF FIRST! Treat your savings as a fixed expense and ensure your own financial security. This will help you avoid going into debt if there is an unforeseen future expense (such as a major appliance replacement). Paying yourself first and saving will also help you address cash flow problems identified in your cash flow planning.
By: Dean Paley
About the Author:
Dean Paley is a professional accountant and publishes Personal Money Tips
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