Managing my money for young adults
Managing my money for young adults

Start this free course now. Just create an account and sign in. Enrol and complete the course for a free statement of participation or digital badge if available.

11 Alternatives to savings accounts

Interest rates have been very low since the late 2000s, and especially since 2012. This is why alternatives to savings accounts are so attractive.

One alternative is stocks & shares ISAs for those aged 18+. These are different from cash ISAs. With these products your money is invested in bonds and shares issued by companies and other organisations. Bonds are also known as stocks, hence the term ‘stocks & shares ISA’. The return you get will depend on how the market prices of these bonds and shares move. Bond and share prices can go down as well as up, which means that the value of your stocks & shares ISA can do likewise. Given this risk, such investments should only be considered if:

  • they’re for the long term (ideally at least 5 years) so that you’re not left open to any short-term reduction in the value of the investment
  • they form only part of your total savings and are balanced by your ownership of other investments that are low risk.

Another alternative is Premium Bonds. You can buy these from the age of 16. They’re sometimes bought as gifts when a child is born or at certain points in childhood.

Premium Bonds require a minimum investment of £25. Each month the bonds are included in the prize draw and can win prizes of up to £1 million. All prize money is tax free. The bonds can be cashed in at any point without the need to give notice.

The downside is that the money invested in the bonds does not earn interest, so the return from the investment comes if and when you win a prize in the monthly draws. If you win no prizes your bonds will generate no earnings at all.

If prices in the economy are rising during the time you own your Premium Bonds the value of what you can buy when you cash them in will be lower than when you invested in them. This fall in the so-called ‘real’ value of an investment is a risk when you hold Premium Bonds as an investment.

One idea, though, could be to buy a small number of Premium Bonds and treat them like continuous lottery tickets, with the monthly chance of winning up to £1 million!

Take your learning further

Making the decision to study can be a big step, which is why you'll want a trusted University. The Open University has 50 years’ experience delivering flexible learning and 170,000 students are studying with us right now. Take a look at all Open University courses.

If you are new to University-level study, we offer two introductory routes to our qualifications. You could either choose to start with an Access module, or a module which allows you to count your previous learning towards an Open University qualification. Read our guide on Where to take your learning next for more information.

Not ready for formal University study? Then browse over 1000 free courses on OpenLearn and sign up to our newsletter to hear about new free courses as they are released.

Every year, thousands of students decide to study with The Open University. With over 120 qualifications, we’ve got the right course for you.

Request an Open University prospectus371