UK Compound Interest Investment Platforms
Compound interest, described by physics genius Albert Einstein as the ‘eighth wonder of the world’, can help you boost your savings or investments. But it only works if you leave your money invested, rather than withdrawing it, and it takes time for the snowball effect to kick in.
The power of UK compound interest investment platforms is not only available for cash savings, which can benefit from interest earned on the balance, but also for investments – especially those made within ISAs or self-invested personal pensions (SIPPs). These tax wrappers can protect investments from UK income and capital gains taxes, and they often offer higher returns than ordinary savings accounts or direct shares shares.
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But it’s important to understand how your returns are calculated, and to compare options carefully. For example, a savings account’s advertised interest rate may not take into account the fact that interest is only paid once per year – whereas an online investing platform might calculate how much you could earn on your investment by adding together the return from the original purchase plus the accumulated annual interest – and then dividing by the number of years you invest.
The key to maximising your returns is to find a savings or investment product that offers the highest possible return, and to stick with it over the long term. That means avoiding frequent withdrawals and, where possible, investing through an ISA or SIPP to make the most of the benefits of compound interest.