How We Use Our Different ISA’s

Saving money and getting any form of interest is tough at the moment. And with inflation at a high our money is actually losing value. But there are different ISA’s available that can help you get a little interest on your savings.

An ISA is an individual savings account, but you don’t pay tax on the interest you earn. There’s a limit on how much you save tax free every tax year which currently sits at £20,000. If you multiple ISA’s this is your total limit as opposed to the limit per ISA account. There are different ISA’s around, but typically you’ll get better rates than traditional savings accounts.

The type of ISA you go for will depend on what your savings goal is so do your research before opening one.

Between me and Luke we have a few different ISA’s that have been opened over the years.

Easy access savings ISA for wedding savings

We got engaged just over three years ago and have been saving money towards our wedding ever since. Every penny saved has gone into an easy access ISA that I have through the Halifax. Over the years the account has had various different interest rates, but it sits at 0.7% at the moment. This isn’t a great rate, and if our wedding was further away I would be looking for a better deal.

Even though we’ve been saving for a while we knew we wanted an easy access ISA so we could access the money anytime we needed it. So anytime we’ve had to pay a deposit on a vendor, or buy an item we can withdraw the money and it’s instantly in our account.

Chances are once our wedding is paid for we’ll have a different easy access ISA for the next big longer-term savings goal.

Longer term savings for our retirement

There are lots of different ISA’s to choose from but the lifetime ISA gives you the most bang for your buck. You can only save £4,000 into it each year (and this comes out of your £20,000 limit). But you get a 25% bonus added as long as you use the money for either your first home or retirement.

Neither me or Luke are first time buyers so we’re looking at lifetime ISA’s from the retirement perspective. At the moment I have a lifetime ISA that I pay a very small amount into each month, but one of my financial goals it to start upping my contributions. And once we’ve paid for our wedding and honeymoon Luke is going to open a lifetime ISA to use towards retirement.

Different ISA’s for diversity- stocks & shares

Like any investing stocks & shares ISA’s carry risk, but me and Luke both pay into ones each month. We have low risk ones that guarantee if we continue to pay in for 10 years that we’ll get at least what we put into it.

For us this seemed like a great way to dip our toes into investing and hopefully make some money. But if not we’d still get all of our savings back. For us this money goes hand in hand with our Lifetime ISA’s as being part of our saving for retirement. So for us leaving it in long term works for us.

Different ISA’s available

Although we only have the above three types of ISA’s at the moment it’s likely that we’ll open a fixed ISA at some point. This ties your money in for a set amount of time, generally between one and five years. But in exchange for fixing the length of time you get a much higher interest rate. This would be good for additional savings that we knew we wouldn’t need to touch.

The other type of ISA we may need one day is a junior ISA. If we do ever have kids they’ll have their own accounts from day one so we can save for them throughout their lifetimes.

Do you have any different ISA’s you save into?

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