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A Marcus isn’t the only savings account I think you should open this year

The Marcus savings account from Goldman Sachs has been a hit here in the UK since it was launched in late September, with 50,000 Britons opening an account within weeks of the product’s launch.

It’s no surprise that Marcus has been well received by savers. Offering a variable interest rate of 1.5% AER, the account offers an interest rate that’s significantly higher than most easy-access savings accounts currently on offer.

Furthermore, the account offers a great deal of flexibility as you can open an account with just £1, transact online and over the phone, and withdraw your funds at any time. There are also no fees or charges. So overall, for cash savers, the Marcus savings account clearly offers appeal when you consider the abysmal interest rates on offer across the savings account market presently.

Low rate

However, while the Marcus account offers a market-leading, cash-savings interest rate, it’s important to realise that a rate of 1.5% is still very low. That kind of rate is unlikely to boost your wealth significantly, as an investment of £20,000 will only generate interest of £300 per after a year. Moreover, when you consider that the current UK inflation rate is far higher than 1.5%, any money earning 1.5% per year over the long term is actually losing purchasing power.

With that in mind, if you’re looking to get more out of your savings, it may be worth opening another type of account alongside a Marcus account. I’m referring to a Stocks & Shares ISA.

Go for growth 

A Stocks & Shares ISA is an account – offered by a number of different providers – that enables you to invest in a broad range of higher-growth investments, such as shares, funds, investment trusts, and ETFs. The account is entirely tax-free, meaning that any gains are exempt from tax, and you can invest up to £20,000 per year. With a Stocks & Shares ISA, you could potentially grow your money at a rate far higher than 1.5% per year over the long term by investing in growth investments, instead of keeping your money in cash savings.

For example, through this type of ISA, you could invest some of your money in the highly-popular Lindsell Train UK Equity fund, which is a mutual fund that invests in UK stocks. It has returned approximately 68% over the last five years.

Alternatively, you could invest some of your money in a selection of growth stocks, such as Boohoo Group, which has generated a spectacular return of around 460% in the last three years alone.

Or, if you wanted to keep things really simple and cost-efficient, you could put some money into an ETF tracker fund, and simply track a market index such as the FTSE 100, accessing the largest 100 stocks in the UK. On average, the stock market has produced returns of around 7-10% per year over the long term, although past performance is no guarantee of future performance.

Of course, these kinds of investments are higher risk than a Marcus savings account. Your money is likely to fluctuate in value and you may not get back what you invested. However, over the long term, there’s a good chance you’ll be able to generate a return of more than 1.5% per year with these kinds of growth investments, and boost your wealth in the process.

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Edward Sheldon owns shares in Boohoo Group. The Motley Fool UK has recommended boohoo group. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.