Saving for a luxury holiday
Every now and then everybody deserves a treat, and one of the ultimate is a luxury holiday. Top-class breaks go one step further than normal holidays. No self-catering, no cramming into one room of a hotel or a small tent, and no chores.
Luxury means luxury; relaxing in the sun, being waited on and not having to lift a finger as you reach new levels of relaxation and are allowed to unwind properly. Full amenities are supplied, all meals are cooked for you and even the towels get replaced daily. There is only one problem with a luxury holiday, the cost. In order to afford such a break you need to be prepared. This is where some advice about savings and how to save properly can be very timely.
There is no greater way to spend a holiday than by living the life of luxury and, no matter how small your earnings, such luxuries can be afforded as long as you are wise with your money and how you save. There are many ways to save through different bank accounts and investment options, but some are higher risk than others.
For example, investing in stock or property can be very lucrative if you know what you are doing, but to those who do not, such mediums represent a high risk as there is a chance that any savings you have could be lost with one wrong decision. The best and simplest way to save your money is with a good savings account; one that will pay a good rate of interest and give flexibility to cater to your financial needs.
There are many options available and it can be tough choosing the right one if you are not aware of the financial terminology and the terms of each account. There are variable deals; these can be added to on a sporadic basis and money can be taken at any time, but the interest rates will change as the Bank of England base rate changes. Another type is a fixed account. These have an interest rate that is fixed for a certain period of time. However, your money also has to be fixed for the account's duration, and can therefore not be added to and money cannot be removed until it has matured (reached the end of its term).
The first place new savers are usually advised to start is an ISA. ISAs are good for giving a better interest rate than some other deals; the reason for this is because you are not taxed on the interest given. The government will allow an investment of up to £5,300 a year into ISAs and will not tax any interest accrued - this means more money for the saver.
As stated, ISAs are available in both variable and fixed forms. Variable deals will allow you to add funds up to the value of £5,300 a year, so you can save gradually towards that perfect holiday. Whereas, if you have a little more money, a fixed rate ISA will allow you to invest up to £5,300 upfront before the account is "locked" and no more funds can be added. A fixed rate ISA is then left to mature when they are unlocked and the funds, including a healthy amount of interest, are returned to you.
If you are partial to the idea of locking money away where it cannot be touched or spent on anything else, then a savings bond may also be a good option. Savings bonds work in a similar way to fixed rate ISAs, but there is tax on the interest of these accounts. However, the pros of these include an added freedom to be able to adjust the account to your requirements. There is no real maximum on the amount of money you can place in a bond and this can be fixed for as little as six months or as much as six years, allowing you access to the money exactly when you need it most.
Fixed deals will typically offer a better interest rate than variable options. This is because you are promising your money to that bank for a specific amount of time, giving the bank more money and becoming more of a valued customer. The bank will then reward the saver with a more preferential interest rate. It is always worth taking your time in choosing the right bank and right account to invest in. While all banks offer ISAs and savings bonds, they will differ in their interest rates, with some banks offering better deals than others. For this reason it is important to do your research before investing as it is important to get the best possible interest rate, giving you a better return for the money you invest with the bank.
If you are holidaying with children, it may be a good idea to get them to save some pocket money too, getting them into the habit of saving at an early age. There are many accounts that offer savings for children specifically, and these can be used to teach children the value of money. They will then have some of their own spending money to use during the family holiday.
Putting some money aside for a luxury break does not need to be hard and, if you pick the right account, the money may be ready to use sooner than you think. By saving sensibly and properly you will be able to enjoy the holiday of your dreams, and be able to afford the best possible holiday with the money you have saved and the interest you have gained from a suitable account. All the saving you have done will be worth it when you are relaxing in your luxurious holiday paradise.
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