You have started saving money and are on track to financial independence. But where is the best place to keep this money? The choices can seem endless and confusing, from easy-access savings accounts to fixed-rate bonds.

But there is no need to worry. Whether you want to build an emergency fund, put money aside for a big purchase or earn more interest on your regular savings accounts, this guide will help you look at the available options and find the best fit for your financial needs.

Easy Access Savings Accounts

If you are looking for flexibility, an easy-access traditional savings account is a great starting point. These accounts allow you to withdraw your money whenever you need it, making them ideal for building an emergency fund or keeping your spare cash in a safe place. With interest rates generally lower than other savings options, you might not earn a fortune, but the peace of mind that comes with quick access to your money is a key benefit of this option.

Check that your regular savings account provider is covered by the Financial Services Compensation Scheme (FSCS), which protects your money, up to £85,000, if the bank or building society that holds your account goes bust.

High-Yield Savings Account

For those willing and able to put their money aside for a longer period, high-yield savings accounts can offer more interest than traditional savings accounts. Although these accounts often come with stricter withdrawal limits, the reward is typically better savings rates. High-yield savings accounts can be particularly appealing to those with substantial savings goals, as the higher interest helps your money grow faster and the withdrawal limits make it more difficult to spend the money that you are trying to save.

Fixed Rate Bonds

Fixed-rate bonds offer a guaranteed interest rate for a set period, usually one to five years. The longer the term, the higher the interest rate typically is. Fixed-rate bonds are perfect if you have a lump sum that you know you will not need access to for a while. However, keep in mind that you won't be able to access your money until the bond matures without facing penalties.

Notice Accounts

Notice accounts strike a balance between easy access and fixed-rate bonds. These accounts require you to give notice – often 30, 60 or 90 days – before you can withdraw your money. In return, they generally offer higher interest rates than easy access accounts but less than fixed-rate bonds. A notice account would be a good option, if you don’t think you can put your money away for a number of years, but can still plan your withdrawals a few months in advance.

Cash ISAs

A Cash ISA is a tax-efficient way to save your money, as the interest you earn is free from income tax. You can save up to your ISA allowance each tax year and there are options for both easy-access ISAs and fixed-rate ISAs, depending on how much flexibility you need. For basic rate taxpayers, the personal savings allowance lets you to earn up to £1,000 in interest tax-free each year, so consider this when deciding between a Cash ISA and other savings accounts.

Pension Savings

If you are thinking long-term, pension savings are probably most important to your financial strategy. While not as easily accessible as other savings options, pensions offer significant tax benefits and can provide a steady income in retirement. The earlier you start, the more time your money has to grow.

Stocks and Shares ISA

If you want to take on more risk for the potential of higher returns, a Stocks and Shares ISA might be a better option for you. Unlike cash ISAs, which offer a fixed interest rate, Stocks and Shares ISAs allow you to invest in the stock market, buy mutual funds and bonds. It is important to remember that while the returns can be higher, so are the risks and the return of your capital is not guaranteed.

Premium Bonds

Premium Bonds offer a unique way to save money. They pay no guaranteed interest, but offer you a chance to win tax-free prizes instead. While there is no guaranteed return on your money, all the money you originally invested is safe. It is a fun option if you are willing to take a gamble for potentially larger rewards.

Finding the Right Savings Accounts for You

The best place for your savings largely depends on your financial goals, time horizon and how much access you need to your money. Do you need a safety net that is easily accessible? An easy-access savings account or instant-access ISA might be your best bet. Looking to save for a big purchase in the future? A fixed-rate bond or notice account could offer the competitive rates you are after. For long-term goals like retirement, consider putting money aside into a pension or opening a Stocks and Shares ISA with its potential for higher returns.