From childhood most of us are told to put away money to save for the future – perhaps for something special. Or perhaps to be sure that when we really need something we have the funds to acquire it, without taking on debt. Whether you place your money in a piggy bank, or in a multinational investment house, our aims are broadly the same; to provide for our future needs, and to protect ourselves against unexpected causes of expenditure.
It is worth distinguishing between savings and investments. 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 or building society 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 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.
There is a wide range of savings and investment schemes available depending on your goals and attitude to risk
We will be able to explain risk in more detail. Contact us before making any decisions for impartial, independent advice.
The value of investments may fall as well as rise. You may get back less than you originally invested.