Savings & Investments
When planning your finances, it is important to distinguish the difference between savings and investments.
Understanding the Difference: Savings vs Investments
SAVINGS
Savings are generally funds that you set aside, but can be accessed relatively quickly. These savings are often for a specific need or purchase, like a holiday or a new car.
The most common way of ‘saving’ is into a bank account (‘deposit’ account) where the money can be accessed in an emergency, and for every £1 you put in, you will get £1 back and possibly some interest.
INVESTMENTS
Investments are designed to be held for a longer term, usually at least 5 years. You need to be comfortable with tying up this money for a period of time, and should not consider investments unless you have some savings in place.
Most investments are not guaranteed to return your money in full, although do offer the prospect of potentially higher returns than deposit accounts. Returns, risk and volatility are the factors that will determine a suitable place for your savings.
Knowing When to Save and When to Invest
Savings and Investment products range from a simple current account, which allows a small amount of interest, but facilitates regular payments and withdrawals without detriment to your savings.
At the opposite end of the scale would be company shares, where you invest money in a company, with the prospect that the company will prosper and the shares will increase in value over time. Whilst the benefits are potentially high, the risks are also much greater.
Key Legal and Regulatory Information
The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated. The levels and the bases of the relief's from taxation may change in the future. You should seek your own professional advice on the taxation consequences of any investment.
The Financial Conduct Authority (FCA) does not regulate National Savings or some forms of mortgage, tax planning, taxation and trust advice, offshore investments or school fees planning.The FCA regulates advice which we provide on investment and insurance business; however it does not regulate advice which we provide purely in respect of taxation matters.