You can make more money investing than by saving in a bank or building society account, but it’s also much riskier.
In Gear Investments, we promote the idea of investing with awareness and responsibility.
What’s right for me?
Saving is typically for smaller, shorter-term goals in the near future (usually two years or less) like going on holiday or having money for an emergency. Investing can help you to reach bigger, longer-term goals (at least four to five years away), like saving for your child’s education.
Access to cash
A savings account gives you access to your cash when you need it while when you invest your money, you typically won’t be able to get at your money as easily as if you had saved it in a bank or building society account.
One big difference between saving and investing is that investing always involves risk. With a bank or building society account, you are guaranteed to get back at least the money you put in. If anything happens to your bank or building society, you are guaranteed to get back all the money you put in, up to £75,000. If the value of your investments goes up, you could earn more than you would in a savings account. But if the value goes down, you could lose some or even all of your money. That’s why you should never invest money that you can’t afford to lose.
Potential for profit
While you can earn interest by putting money into a savings account, you generally earn a lower return than investments. Investments have the potential for a higher returns than a regular savings account. The main idea behind investing is to put the money you have saved into things you think will go up in value over time. Things like shares, bonds, or property. If you sell these for a higher price than you initially bought them for, you make a profit.