People should save up to six months' worth of their salary stored in a savings account for emergency purchases, it has been suggested.
Ben Yearsley, investment manager for Hargreaves Lansdown, advised consumers to take advantage of the tax-free benefits providing by individual savings accounts (Isas) or premium bonds .
Although many people enjoy the excitement of holding individual shares, a cash Isa is a good place to deposit rainy day emergency cash, he noted.
Savers will be able to deposit £3,600 into a cash Isa over 12 months under new regulatory changes introduced in April 2008, compared to the current annual subscription limit of £3,000.
Few options are available to investors looking to hold their assets in cash and Isas offer a good choice given that the best interest rate paying savings accounts frequently fluctuate and tax-free national savings vehicles are not the highest paying products, Mr Yearsley commented.
"Everybody should have about six months of salary saved up as rainy day emergency cash. A good place to put that is in your cash Isa, if that's sufficient," he said.
Six months' salary in savings advised
Six months' salary in savings advised
Mon, 07 Jan 2008
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