When we earn money, we hope to see some kind of return on the savings we put aside. Whether it is interest from the bank or investments, we hope to accumulate some kind of extra capital to take our savings that bit further. We invited Jaz Singh and Arun Kumar on to Zee Companion to talk us through various kinds of investments so that you can see your money pot pile up.

Properties

One place to put your money is into property. According to Jaz and Arun, now is a good time to invest because interest rates are low. However, you should take into account that interest rates will be rising soon as the economy gets stronger, so you should to calculate whether you can repay your mortgage at the new rate.

Getting on the property ladder is not difficult. You need to provide basic details such as your passport, national insurance etc. and show that you have a good credit rating so that you prove you do not miss payments.

For anyone wanting to get onto the property ladder, buy-to-lets are always good as they are one of the safest investments in the UK right now. I really wanted to help first-time buyers so asked Arun and Jaz for some top tips:

  • Look into the market and carefully at what you’re buying
  • Find out how much a house sold for previously on the street you are looking at
  • Some banks provide free surveys so that they can tell you the average property price
  • The further North you go, the cheaper property prices will be. However, you return will be less than if you invested in a property in the capital.

Alternative investments

There are many alternative types of investments that we spoke about so that you can see a better return on your savings.

  • Car park bays in airports

You can purchase a bay and rent it out and be almost guaranteed a tenant all year round. You can apply for the space and once it has been brought you will receive title deeds from the UK Land Registry. For example, Gatwick airport charges an entry level feel of £50,000 for which you receive two bays and a return of 8% and secure property title deeds.

  • EIS (Enterprise Investment Schemes)

This is for high-rate tax-payers and enables them to receive tax breaks in investments. This is for people paying income tax or capital gains tax as it allows them to rebate from HMRC and invest the tax profits into schemes.

  • Trusts

These protect your assets and enable you to keep your capital and access of your capital safe; particularly if want to pass on an inheritance then you can build that trust and leave it to your children and grandchildren.

There are various types of Trusts but if you are planning your retirement then you may want to consider the Royal Fund of England trusts which keep properties safe as long as they are mortgage free. If you are a young person and high earner, a Trust may also be useful for you. Arun and Jaz stated that young people should begin thinking about investments and their retirement early on, as life expectancies are increasing and therefore you will need provisions.

Bonds and Shares are two other options when it comes to seeing a return on your savings. Government Bonds are when you invest into the government. This can be risky if you are investing in a country such as Greece where the economy is currently quite volatile! Generally, investing in the UK’s economy is not so risky because it is unlikely the government will go bust.

However, you also have the option of Corporate Bonds where you invest your money into a company. Although this can seem riskier because a company’s profits can rise and fall and be impacted by the economy, they see a greater return and may not be as risky because Blue Chip companies are doing better than some governments.

Buying shares into a Blue Chip company can also create a greater return on your savings. Once again, although traditionally seen as a ‘higher-risk’ investment, because you are putting in more of your money, companies like Tesco are not as volatile as they once were seen to be. If you invest around £10,000 and more into a Blue Chip company, you can see a healthy return on your savings.

Thinking about the future is important when it comes to savings and simply putting your earnings into a bank is not the only way, or even most viable option, when it comes to benefitting from your gross earnings.