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Put your eggs in baskets not pancakes before end of tax year

is it better to invest in cash or sharesIt’s Shrove Tuesday! Team Minted will be powering through the egg stores after school in a batter frenzy which the children will end up sticking to the ceiling rather than their plates. Great messy fun but really I should keep back those lovely organic six-packs for a decent cake or (if I could do it) some super-Jamie soufflé later on.

The same applies to our nest eggs too. It’s the eve of Lent, that time of austerity, which is a good time to think about saving not spending. And it’s also about five weeks until the end of the tax year: if you don’t use your yearly allowances by then, you’ll lose them forever.

So why not save spare cash this year into an Individual Savings Account (Isa)? You don’t need to have the full allowance of £15,240. You can just tuck away whatever you have. Then all your gains or income on the money will be tax-free.

There is one slight problem. Interest rates on cash are paltry at the moment with many accounts paying under 1%. This is less than the current rate of inflation (1.8%) or the increase in the cost of living – your money will end up being able to buy less. Unfortunately many people don’t realise that they’re actually losing money by putting cash in these “safe” accounts.

Investing in shares can earn you more like 3.5% in income and there is potential for your money to grow in value too – whereas in the bank it stays at the same level. But the trade-off for bigger returns is greater risk. You could lose some or all of your money.

Understandably, many people are afraid of that risk. They’re also put off by the jargon surrounding shares: it’s all too complicated to understand. But they are missing out. I like to think of it as similar to children and social media. Yes, the internet is full of dangers. However, completely denying your kids access turns them into pariahs and tech outsiders.

The solution is to try to figure it out and police it as best you can. So too with investing. It’s not as hard as it looks once you’ve grasped a few core concepts. And remember, you can always open the Isa with cash and swop into shares later. So you keep the allowance and can invest when you feel ready.

Help is also at hand because March is Investment Month at Skinted Minted Mum. We’ve asked experts at Bestinvest and Hargreaves Lansdown to pick a few funds suitable for beginners which are listed here. All you need to do is choose and sign up. Later on, we’ll be giving tips for more advanced investors so watch out for that. In the meantime, there’s a great recipe for (genius idea) prosecco pancakes here.

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Monday, 22 April 2019