Should I save or invest?

Unsure whether saving or investing would suit your circumstances – or even what the differences are between the two?

Saving: how does it work?


Saving is typically for smaller, shorter-term goals (usually no more than three years) such as going on holiday, buying a car or just to have money on hand for emergencies.

Easy access to your cash

Usually you put your money in a bank or building society account – or maybe take out a cash ISA. Some savings accounts may have a fixed term, or limit how often you can take money out and may require a notice period

Minimal risk

The saving account value will not fall, but real value can fall if inflation is greater than the interest rateEarn interestYou can earn interest by putting money in a savings account.

Investing: how does it work?


Investing can help you reach bigger long term goals (typically five years or more) such as your child's university education or your retirement.

Harder to access

When you invest your money, it's typically not as easy to get your hands on it quickly as compared to a savings account.

Invest directly in shares, or via a fund

In a fund, your money is pooled with that of other investors. In turn, the fund could invest in anything from company shares to government bonds or even property.

Always involves risk

Values can go down as well as up and you may lose some or all of the money you invest.

Potential for a higher return

Over the long term there is a chance your money will grow more, but remember you could lose all the money you invest.

Helping you decide

Do you have any debts?

You might be paying more interest on your debt than you could earn by saving or investing money. Consider paying off any debts first.

Save money for emergencies

It's worth building an emergency fund to cover at least three months' worth of living expenses. You could keep this in an easy access account, in case of an emergency such as redundancy, or to cover unexpected expenses such as car breakdowns.

Access to your money

If you've got a specific goal in mind and are comfortable knowing that you won't be able to access your money for a number of years, then investing could be for you. But if access to your money is important, a savings account may be more appropriate.

Understanding Risk

Some people have more of an appetite for life's risks than others. You might know where you stand on the subject, but many people haven't fully explored their attitude to risk. Our steps to understanding risk guide helps you to think about the issues.

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