What to do with savings

Hi Jasmine,
I'm hoping you might be able to help me with a question about savings. I've only recently decided to start trying to save a bit of money on a regular basis (I'm 19) but I don't really know what my options are. I'll only be putting about £50 a month away for the time being. It's not a great amount but better than nothing I guess!
Apart from a savings account at one of the high street banks, are there any other options?
Thanks,
Cheryl

I’m glad you’re planning on saving Cheryl, and don’t worry about it being a small amount. At your age even small amounts of money invested each month can grow into big sums later on.

First of all, make sure you cover yourself for any eventuality. It’s a good idea always to have some money saved in an easy-access account that will cover you for at least three months in case you lose your job and can’t pay your bills. There are new savings rates coming on the market all the time so check a price comparison service (www.moneymagpie.com/savings-account-comparisons). So set up an easy-access account into which you put enough money to cover you if the worst happens - and leave it there. Don’t touch it unless you have an emergency!

Then you should also think about long-term investing. Does your employer have a pension scheme for you? If you’re not already putting money away for your retirement then now is a good time to start. Even if it’s just £25 a month, over decades that can grow into a good amount for you. Think about setting up a Stakeholder pension for yourself - they’re cheap and cheerful and over time the money can build up for you.

If you would like to save for something a little more short-term like a deposit for a house, then think about putting money into a savings bond. ICICI, an online bank (http://www2.smart-quotes.com/click.asp?s=L&sn=SQ10676&ctc=1647&src=1759&lnk=1021&cmpg=&web=&brn=1125) currently offers the best rates for these. With savings bonds you have to keep your money in the account for at least a year and you can’t touch the money until the end of the bond period, which is why they often give better rates than other types of savings.

You could also put some money into Zopa.com (http://www.zopa.com/partner/AFFMoneyMagpie/public/lending/lending-at-zopa.html). That’s an online saving and borrowing portal and if you become a ‘Zopa lender’ you can choose what interest rate you want for your savings, although you will need to be willing to keep your money there for at least a year. I’m a Zopa lender myself and I’ve found the interest earned to be generally pretty good!