Diversification is a tactic where you spread your money across multiple asset classes. This could be the likes of real estate, cash stocks and bonds.

The main purpose of this is to spread your investments across a wider range of assets, so your entire portfolio isn’t impacted if a downturn occurs in a certain part of the economy.

If investments aren’t your thing, you can diversify your savings across a number of traditional savings accounts too.

Yes, you can benefit from a number of different savings accounts at the same time.

As an example, you might put money in a high-interest savings account for short-term goals, while also opening an ISA for longer-term tax-efficient saving. Savings products are considered to be safer because they generally have fixed rates of interest, so you earn interest on your hard-earned cash without risk of the interest rate going down.

You can have as many savings accounts as you wish, although there might be a limit to the number you can open with a particular bank or building society.

There are a few reasons why it’s beneficial to have multiple savings accounts. Here are some to consider:

• You can earn more interest;
• Tracking your different financial goals is easier, such as buying a car or going on holiday;
• Having multiple saving accounts gives you a better idea of what funds are off limits, and which can be used for emergencies.

There’s a range of different routes you can take when choosing a savings account. Before making any decisions, you’ll want to get a clear picture of the types of accounts available.

Here’s a few options:

• Cash ISAs - ISAs allow you to save up to £20,000 per year tax-free. As with many account types, be mindful that some accounts require minimum balances.
• Everyday Savers - These savings accounts are easy access, meaning you can withdraw money whenever you wish. However, these tend to have lower interest rates because of their accessibility.
• Fixed Rate Bonds - A bond is the most restrictive form of saving because it is a no access savings account. This often comes with the benefit of higher interest rates, making bonds perfect for longer term saving. Opening a bond means you can rest assured your money is securely tucked away. Plus you won’t be tempted to dip into your savings because you need to wait until your bond matures to access it.

You can read more on how bonds work and how they compare to ISAs here.

Reviewing your personal finances before rushing into opening savings accounts is a good idea.

If, for example, your savings are an emergency fund you may need to access then an easy access saver is your best option. Once you have enough savings for your short-term needs, it’s time to think about opening an account that could earn you more interest.

It’s also wise to think about your savings goals. Consider your desired level of access to your money, and the interest rates available. Easy-access accounts offer flexibility, while fixed-rate accounts may offer higher returns but with limited access. 

The prospect of multiple savings accounts can seem overwhelming but there’s a few things you can do to help manage each account.

• Label your accounts; giving them a title, like ‘emergency fund’ or ‘mortgage repayments’, should help to keep everything in order.
• Consider setting up standing orders; automatic payments can help you to keep on top of minimum balance requirements without too much thought.
• Put your goals in order; think about how much money you want to save towards each goal and keep note.