SAVINGS rates are pretty poor at the moment but you can still build up a healthy sum over the next decade by putting a small amount of cash away each week.Here is how saving £20 per week could be worth £13,000 over the next 10 years.
2The more you can afford to save, the faster you can reach your goals.Credit: Getty
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Banks and building societies haven’t had much incentive to offer decent savings rates in recent years.
Record low interest rates have pushed down the pricing of savings deals and there are very few products that can beat inflation.
It is still worth saving though so you have money put aside for emergencies or if you want to pay for big items such as a holiday, car or house deposit.
The highest rates are on offer for those willing to lock their money up for longer and savvy savers can often access five-year fixed rate savings accounts that pay interest of 1.5% per year.
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Some may even let you earn interest tax-free through an Isa.
You don’t even need a lot of money to get started.
Some will let you open an account with as little as £100.
The more you can afford to save, the faster you can reach your goals.
Even saving £20 per week, the equivalent of a few takeaway lunches, dinners and coffees, can give you £1,200 per year to put into a savings account or Isa.
That £20 per week could be worth £13,000 if you keep saving for a decade and can find a rate of 1.5% each year for your savings.
This may involve moving your money around or locking it up in long-term accounts.
You will also benefit from compound interest as the money you earn each year will bump up your savings and boost your returns.
Here is how it works.
Saving £20 per week would give you £100 per month and £1,200 after a year.
This would earn you interest of £18 based on a savings rate of 1.5%.
That leaves you with £1,218 in savings by the end of year one.
You can start the year with £1,218 of savings and will have £2,418 12 months later by continuing to save £20 per week.
This amount would then earn interest of £36.27 that you can put back into your savings.
You will then finish the year with £2,454.27.
Keep saving £20 per week on top of the £2,354.27 and your pot will be worth £3,654.27 by the end of the year.
The 1.5% interest rate would give you an extra £54.80 on top, bumping your savings up to £3,709.07.
You can take that £3.709.07 into year four and it will be worth £4,909.07 after 12 months if you …