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Is an ISA the Best Way to Save for My Son or Daughter’s Wedding

by Jim ONeil on May 16, 2011

in ISA's Individual Saving Accounts

There are many different opportunities available for short-term savings, but none of them offer the benefits of tax-free earnings that an ISA offers. Having said that, be careful before jumping in with both feet, as you will want to have a general idea of when the big day is going to occur.

We say this because there are penalties if the need arises to take the money out before the full term has expired.

If your son or daughter is at a very young age, there may be different avenues to pursue to lock up the money for a longer term and take advantage of the higher interest rates offered. However, if the marriage is expected in the next few years, an easy access ISA is probably the best bet, mostly because of the tax free benefit on all earned interest.

For those that are looking long term, there are multiple savings options available that will offer a much better return on your money. The one factor that you have to keep in mind is that these earnings are going to be taxed.

For the average person, this means that they will only receive about 80 percent of the earnings.

Keep that in mind when comparing the ISA accounts interest rates to the savings interest rates and choose one that will pay a rate that will compensate you with higher earnings even after the taxes have been paid on any interest earned.

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