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Have £500 to save this payday? Here are 3 clever financial moves you could make

We’re approaching the end of the month, which for many people across the UK means one thing – payday. Have a few hundred pounds to spare this month and looking for ideas? Here are three smart financial moves that could boost your wealth significantly.

Invest in top funds

One easy way to get your money working for you is to invest in funds. Here, your money is pooled together with the money of thousands of other investors and managed by a professional portfolio manager, which takes a lot of the stress out of investing.

Personally, I’m a big fan of ‘global’ funds that are able to invest all around the world. With these kinds of funds, portfolio managers can invest in leading companies such as Apple and Microsoft which aren’t listed here in the UK. A global strategy is also likely to provide protection against Brexit. 

A number of global funds have performed ridiculously well in recent years. For example, the Fundsmith Equity fund is up 166% in the last five years. The Lindsell Train Global Equity fund has performed even better and has returned 178% in that time. Past performance is no guarantee of future performance, of course, but you can’t deny that these are amazing returns.

Both of these funds are available on the Hargreaves Lansdown investment platform where you can invest with as little as £100.

Invest tax-free

If you want to be really smart, you could invest in these kinds of funds through a Stocks and Shares ISA. With this type of account, all your capital gains and income will be tax-free, which is a huge benefit as it means more money for you. Aside from its tax perks, another big benefit of this ISA is its flexibility, as there are no restrictions on when you can access your money. This combination of tax-free investing and flexibility makes the Stocks and Shares ISA a brilliant long-term savings vehicle, in my view.

Pick up 25% bonuses

However, if you’re happy to invest until retirement, you may want to consider putting your money into a Lifetime ISA or a Self-Invested Personal Pension (SIPP). These kinds of accounts are a little more restrictive as you can’t access your money at any time. However, capital gains and income are tax-free, and you’ll receive generous bonus top-ups on your contributions. For example, the Lifetime ISA, which is open to those aged 18 to 39, comes with a 25% bonus on contributions up to £4,000 per year. So if you put in £500, you’ll get a nice little bonus of £125. Similarly, with the SIPP, you get tax relief top-ups. If you’re a basic rate taxpayer and put in £500, you’ll also get a top-up of £125.

Both of these accounts allow you to hold a wide range of investments. So, for example, if you open one of these accounts with Hargreaves Lansdown, you could invest in one of the top global funds I mentioned above and receive 25% bonuses. With that kind of set-up in place, you could potentially see some amazing results.

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Edward Sheldon owns shares in Hargreaves Lansdown and Apple and has positions in the Fundsmith Equity fund and the Lindsell Train Global Equity fund. Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool UK owns shares of and has recommended Apple and Microsoft. The Motley Fool UK has the following options: long January 2020 $150 calls on Apple and short January 2020 $155 calls on Apple. The Motley Fool UK has recommended Hargreaves Lansdown. 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.