Cost of living crisis: how to save money trading and investing

Cost of living crisis: how to save money trading and investing Image source: Getty Images

You’re probably well aware of the current cost of living crisis. Inflation and rising energy prices may already be tearing a hole in your pocket. Like many other people, you might be stressing about how to save money in times like this. But don’t lose hope!

One place you might be overlooking is your investment portfolio. So, I’m going to share some top tips and ways that you can slash your spending and reduce how much you pay when you’re trading or investing.

The cost of living crisis and investing

Dealing with rising prices and high levels of inflation is a tough nut to crack. You might have already seen plenty of increases in areas of your life such as:

  • Your household energy prices
  • The cost of fuel to fill up your car
  • The amount you pay for your supermarket shop

So, what on earth do you do about all this? And what’s it got to do with investing? Sadly, most of these price increases are out of your control. And, you’re not going to be able to single-handedly iron out all these problems.

This means you’re left with making changes in the areas you can control. And the good news is that your investment account is one place you can make some easy adjustments. This way you can save some money and counteract some of this grim news.

How to save money trading or investing

I’m going to share some simple ways that you can save some money when you’re trading or investing. This could help you better cope with rising costs in other parts of your life.

So, without further ado, here are five steps you can take in order to spend less money as an investor:

1. Look for low trading fees

Make sure you’re using a platform with low fees, especially if you’re a frequent investor. It may only seem like a few pounds difference, but it will soon add up to a big chunk of change.

One example of a useful account is the FinecoBank Multi-Currency Trading Account. It comes with a small flat fee for making trades and has no foreign exchange fees.

2. Use an ISA

Making use of a stocks and shares ISA account is going to make sure that you’re reducing how much tax you pay.

With National Insurance about to go up, the last thing you want is to pay more tax than you need to on your investment income.

3. Understand your allowances

You may not realise this, but each year, you get a capital gains tax-free allowance of up to £12,300 and a dividend allowance of up to £2,000.

Being aware of these allowances means that you can organise your portfolio to take advantage of these tax breaks and save some money.

4. Use a brokerage that suits your style

Different brokerage accounts will work out cheaper depending on factors such as how frequently you invest and what markets you trade in.

So, it’s really important that you set yourself up with the top-rated share dealing account that best suits your specific style of investing or trading.

5. Look for cheap platform costs

Your investing platform might be charging you an arm and a leg simply for using its services and holding your investments there. Be sure to check your current platform fees.

It may be the case that you got a cheap welcome offer that has now expired. So, take a quick look to see how much you’re being charged and then use our brokerage calculator to see if you’d be better off elsewhere.

Why it’s worth knowing how to save money when investing

These measures will ensure you’re keeping some extra money in your back pocket. Not only that but reducing your investment costs can also help you build long-term wealth.

Extra investing costs and fees will slowly erode away at your portfolio over time, preventing the magic of compound interest from truly flourishing.

It may only seem like you’re saving a small amount right now. But those pounds will add up to significant sums over time! With inflation nibbling away at your purchasing power, you need all the help you can get. So, do a quick review of your current situation and then take action where necessary to cut your costs and help reignite your portfolio.

Please note that tax treatment depends on the individual circumstances of each individual and may be subject to future change. The content of this article is provided for information purposes only. It is not intended to be, nor does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.

Was this article helpful?


Comments are closed.