Making important decisions with regards to money

Whether making plans for a retirement, looking for suitable life, health or income protection insurance or trying to explore investment options, the best advice is always to get sound professional advice from a trained financial advisor.

There are no two ways about it - all major decisions involving money need to be carefully considered and relevant options need to be investigated and compared thoroughly. After all, if planning for a retirement, no one wishes to make a decision that will leave them struggling when they finally reach their retirement age.

In the same way, taking out an income protection insurance, for instance, will mean various policies will have to be carefully scrutinised and compared to ensure they will indeed adequately protect one's income.

Investing in savings requires the same kind of care and attention. There is a multitude of different options out there, and finding the right one can be daunting to say the least.

It is, however, possible to take some of the stress out of the search by consulting comparison sites, where the best currently available savings accounts are listed side by side, making it possible to quickly and easily compare the various features, rates, etc offered by these choices.

Taking a look at savings interest rates to begin with will quickly highlight the fact that individual savings accounts are among the best options currently offered by banks. These options have, apart from the high rates, one major advantage - namely the fact that the funds accumulated within them are free from taxes.

This does mean that there is an upper limit to possible balances, but unless the aim is to invest large amounts of money, this will not prove a huge problem. Some of the best ISAs have rates that are only rivalled by comparable bonds, which have the disadvantage of not being tax free, although it is obviously possible to invest larger sums here.

The best fixed rate isa for a one year term, for instance, currently offers an AER of three per cent and has a minimum investment of £500. With this particular choice, withdrawals are not permitted until the end of the year.

The best two-year option currently offers 3.75 per cent, with the same deposit requirement. Here, withdrawals are possible but will be subject to a loss of interest.

The same conditions apply to the best three year term available right now, which offers a rate of four per cent. A five year term with a minimum deposit of only £100, on the other hand, offers a rate of 4.5 per cent. In this case, funds may not be withdrawn until the term has matured.

In comparison, a five year bond offers a rate of 4.8 per cent, but has a minimum investment of £50,000. Funds may not be withdrawn here, either. These conditions also apply to the best three year bond, which offers a rate of 4.3 per cent, as well as the best two year option, which currently offers an AER of 4.05 per cent.

For a more direct comparison, the only five year bond with a £500 minimum investment currently offers an AER of 4.4 per cent. The three and two year bonds with £500 deposit requirements offer 4.1 per cent and 3.85 per cent respectively.

These comparisons show how important careful study of various options before coming to any kind of decision really is. On pound for pound comparison, an ISA will actually provide better rates than a savings bond, while also having the advantage of being tax free.