The different deposit based investments would involve:

• Cash deposits

• Fixed Deposits

• Cash ISA

• National Savings & Investments

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With each asset class comes different levels of risk and with the higher risk, the more likelihood of a better return and/or loss.

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Cash deposits

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Keeping money in cash deposits, in other words bank or building society accounts, can have their advantages and disadvantages. There is little risk involved with keeping money in a cash deposit, able to access it easily and the money is not subject to market fluctuations. However, inflation and low interest rates can have an effect on the capital and reduce it over time. Current 2017 rate of inflation is 2.6% with an interest rate of 0.25% (this is stated monthly by the Bank of England) (sourced Bank of England website) which does not make it desirable for real capital growth.

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Fixed Interest Deposit

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A deposit where the rate of interest is fixed for a period of time, usually between one and five years. Savers are offered a higher rate of interest than cash deposit accounts can offer and they are able to do this because the saver loses access to their money for a period of time. Interest is treated as savings income and is deducted at source at 20% (basic rate taxpayers have no further liability).

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Cash ISA

 

This is a deposit account which is placed in a tax-free ISA environment. Read more here.

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National Savings & Investments (NS&I)

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Previously known as the Post Office Savings Department. There are many different products available such as premium bonds, income bonds, direct ISA, savings certificates, children's bonds & direct savers. To read more click here. By clicking here, you are now departing from the regulatory site of ALM Financial. Andrews Loynton & McCulla is not responsible for the accuracy of the infomation contained within the site.

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HM Revenue and Customs practice and the law relating to taxation are complex and subject to individual circumstances and changes which cannot be foreseen.