Readers, I must make a confession. I haven’t been taking full advantage of the free money on offer.
Last year, I availed myself of a whopper of a free money deal – £250 from Yorkshire Bank to switch my current account.
At the time, I didn’t have a lot of cash savings to my name. So when I started building up a bit of a horde, I just dumped a couple hundred quid each month into the savings account that came with my current account because that was easiest.
And this brings me to my confession. The problem with this savings account was that it paid an OK amount of interest – but far from the best. While I, a money hack, nagged our readers into the best-buy savings products, I wasn’t taking best advantage of my own options.
Typically, savings accounts from ‘big banks’ will pay around 0.6% on your deposit. Mine paid a bit better at 1%.
But the best easy-access account on the market now pays a ‘whopping’ 1.5% (thanks, Goldman Sachs). I have now switched and this means for every £1,000 I squirrel away, I get £15.
That is £15 of free money! For doing the bare-minimum of leaving my cash sitting, urchin-like, in a savings account that took me less than five minutes to open and transfer money into.
But let’s not stop there. In 2016, I moved from a world of freelancing, where no one gave me a pension pot, to full-time work where my employer is obliged to do so.
In my first year, I paid in £427.08. My employer paid in £533.85. I received £106.77 in tax relief. I have also invested the pot into a strong-performing investment trust, where I have had annual returns of £170.51.
So, all in, for a contribution of £427.08, I have earned £811.13. That’s a lot of free money. All from a scheme I was automatically enrolled in.
And these are just the schemes I have bothered to take advantage of (and pretty lacklustre bothering it was too).
If I opened up a Lifetime Isa (Lisa), I could get £1,000 free money every year, in the shape of a 25% government bonus. Were I to choose an investment version, I would put my money in high-grade funds, which hopefully would make me even more money even while I sleep.
Money in a Lifetime Isa can only be withdrawn to buy a home or as a pension. If you want a tax-efficient way of investing without these strings attached, a straight-up Stocks and Shares Isa is the way to go. Put £50 a month to invest in a fund, and you should see your money grow over time, aided by the magical mathematics of compounding. Check the Moneywise First 50 Funds for beginners for tips at Moneywise.co.uk/first-50-funds, but be aware investments can go down too.
And if you have a low income, schemes such as Help to Save are money giveaways. Every pound you put into one of these government-funded accounts, you’ll get an extra 50p, up to £1,200 over four years.
But going back to my original confession,the problem inherent with all of these schemes is us. You and me. All of these savings schemes come with impressive benefits. But it’s up to us to take advantage of them.
There’s free money growing in the trees, but we’re not looking up to see it.
Like I said, I’m not guilt-free in this respect. I’ve got a Stocks and Shares Isa, but haven’t been putting enough into it. I haven’t opened a Lisa because I don’t see it being useful for my cunning property-buying plan (more on that in another column in the future).
And I’ve only just overcome my sloth to get an easy-access saver that tops the market. It really didn’t take a lot once I’d actually put my mind to it.