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Top 5 safety tips for savers and investors

Posted on 5 May 2015

Your money is safer than you might think

With interest rates on cash ISAs and savings disappointing at best, investments like stocks & shares ISAs are becoming more appealing.

But after the shock of banks collapsing and even a nation going bust, we may also be feeling a bit twitchy about keeping our cash safe and venturing into pastures new like investing.

Before you resort to using your life savings as loft insulation, read our top 5 safety tips for savers and investors.

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Source: flickr

 

1. Cash in the bank is protected

Good news! Even if your bank did go bust with no hope of salvation, the Financial Services Compensation Scheme (FSCS) will step in to protect your cash.

The FSCS covers money in current accounts, savings accounts and Cash ISAs including any interest earned, up to a maximum £75,000 for single accounts and £150,000 for joint accounts; as long as the financial institution the money’s with is authorised by the Prudential Regulation Authority (PRA).

So it pays to make sure your bank or building society is authorised and to keep the money held with any one financial institution within the FSCS compensation limits.

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Source: flickr

 

2. Money invested in a stocks & shares ISA is protected too

Yes they are investments not savings, but stocks & shares ISAs are also protected by the FSCS. So if your stocks & shares ISA provider went out of business, your investment’s covered for up to £50,000.

Just to be clear, that’s protection against the provider of your stocks & shares ISA failing, not the funds your ISA money’s invested in. Sadly, there’s no such thing as compensation for an investment performing poorly.

 

3. Taking some risk could bring greater rewards

Like any investment, a stocks & shares ISA comes with risk. Unlike a cash ISA, the value of a stocks & shares ISA can go down as well as up and growth can’t be guaranteed.

When you invest you’re playing the long game not going for a quick win. For your money to have the best chance to grow, try and keep it invested for at least 5 years and ideally longer.

Think of investing as putting your money to work by buying in to the future performance of companies - reflected in the performance of the stock market - in the hope they do well. Over time the reward could be a better return on your money than a cash ISA or savings account.

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Source: flickr

 

4. Keep a separate emergency fund

But what about when the boiler conks out or the car breaks down just before pay day? Do all you can to leave your investments alone by being prepared for the unexpected. Keep some cash separately in an easy access account, ready for action.

5. The bank’s still safer than the mattresses

Mattresses and floorboards were never intended as secure homes for hard earned cash. Yes, you know exactly where it is, but it’s not earning a penny in interest and doesn’t stand a chance against inflation. And what if you were robbed or there was a fire? Most home insurance policies only cover a limited amount of cash.

Bite the bullet and keep your cash where it’s safest - in a savings or investment account covered by the FSCS.

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Source: flickr

 

Thinking about investing?

SunLife has carefully selected Scottish Friendly to provide My Smarter (New ISA). My Smarter (New ISA) is a Stocks and Shares ISA that’s classed as long term insurance by the FSCS, not an investment, so it sits in a different compensation band. In the unlikely event Scottish Friendly went bust, 90% of the ISA’s value would be compensated, and there’s no upper limit on that.

If you enjoyed this article, you might also like to read How much should I have in savings?

SunLife offers a range of straightforward and affordable products including over 50s life insurance, funeral plans, equity release, pet insurance, home insurance, car insurance, ISAs and Will writing services.

Here's the information that you need to know about who we are and the other companies that we work with in order to provide our products and services.

Who are SunLife?

Phoenix Life Limited trades as SunLife and is the provider of the Guaranteed Over 50 Plan, SunLife Insurance and the life insurance policy payment option for Funeral Plans. Phoenix Life Limited’s registered office is at 1 Wythall Green Way, Wythall, Birmingham, B47 6WG (registered in England, no. 1016269). Dignity Funerals is not authorised or regulated for this activity by either the Financial Conduct Authority or the Prudential Regulation Authority. Dignity Funerals Ltd is a member of the National Association of Funeral Directors.

SunLife Limited distributes financial products and services and is a company limited by shares, registered office: 1 Wythall Green Way, Wythall, Birmingham, B47 6WG (registered in England, no. 05460862). SunLife Limited is authorised and regulated by the Financial Conduct Authority and is entered on the Financial Services Register (registration no. 769427).

You can contact us by post at SunLife, PO Box 1395, Peterborough, PE2 2TR or by phone on 0800 008 6060.

If you choose to add Funeral Benefit Option to your Guaranteed Over 50 Plan the funeral services are arranged and provided by Dignity Funerals Limited. Dignity Funerals Limited is a company registered in England and Wales No. 00041598. VAT registered No. 486 6081 14. 4 King Edwards Court, King Edwards Square, Sutton Coldfield, West Midlands, B73 6AP. Telephone No. 0121 354 1557. Fax No. 0121 355 808. Part of Dignity plc. A British Company. Dignity is not authorised or regulated for this activity by the Financial Conduct Authority or the Prudential Regulation Authority but is a member of the National Association of Funeral Directors.

Who provides the Funeral Plans?

Dignity Funerals Ltd arranges and provides the funeral services. Dignity Funerals is not authorised or regulated for this activity by either the Financial Conduct Authority or the Prudential Regulation Authority. Dignity Funerals Ltd is a member of the National Association of Funeral Directors.

The life insurance policy that pays for your funeral will be provided by Phoenix Life Limited, trading as SunLife.

Who provides My Smarter (ISA)?

My Smarter (ISA) is provided by Scottish Friendly Asset Managers Limited. Authorised and regulated by the Financial Conduct Authority. Details can be found on the Financial Services register, registration No. 188832. Member of The Investment Association. Registered Office: Scottish Friendly House, 16 Blythswood Square, Glasgow G2 4HJ.

Who provides the Will writing services?

Hugh James is authorised and regulated by the Solicitors Regulation Authority (SRA Number:303202).

The information contained on this website is based on Hugh James' understanding of the law of intestacy in England and Wales only as at April 2014. The law in Scotland and Northern Ireland is significantly different. This is for information purposes and is not intended to be legal advice.

Who provides Family Life Insurance?

SunLife Family Life Insurance is provided by Scottish Friendly Assurance Society Limited which is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Details can be found on the Financial Services register (registration number 110002). Registered Office: Scottish Friendly House, 16 Blythswood Square, Glasgow G2 4HJ. 

Who provides SunLife Pet Insurance

SunLife Pet Insurance is arranged and administered by BDML Connect Limited. BDML Connect Limited is authorised and regulated by the Financial Conduct Authority (No. 309140). Registered in England and Wales Number 02785540. Registered Office: 45 Westerham Road, Bessels Green, Sevenoaks, Kent, TN13 2QB.

Who provides SunLife Home Insurance

SunLife Home Insurance is arranged and administered by BISL Limited and underwritten by a panel of insurers. BISL Limited are an intermediary authorised and regulated by the Financial Conduct Authority. Registered in England no. 03231094. Registered office Pegasus House, Bakewell Road, Orton Southgate, Peterborough PE2 6YS.

Who provides SunLife Car Insurance

SunLife Car Insurance is arranged and administered by BISL Limited and underwritten by a panel of insurers. BISL Limited are an intermediary authorised and regulated by the Financial Conduct Authority. Registered in England no. 03231094. Registered office Pegasus House, Bakewell Road, Orton Southgate, Peterborough PE2 6YS.