Expert Victoria Scholar on difference between saving and investing
The key to building a savings pot worth more than £1 million is to take advantage of tax allowances across multiple investment and savings accounts, according to new research.
Investment experts Hargreaves Lansdown found 81 percent of its clients who have pots worth more than £1 million have a stocks and shares ISA.
These allow Britons to put their money – up to £20,000 a year – into a range of investments while protecting any income and capital gains from UK tax.
This group will also be more likely to have a SIPP – Self Invested Personal Pension – that allows them to actively chase higher returns through investments.
Contributions to SIPPs qualify for tax relief, which means contributions are boosted by a payment from the government.
For example, a 20 percent basic rate taxpayer who contributes a lump sum of £2,000 into a SIPP will get tax relief of £500 from the government, so …