When you put money aside, are you mainly looking for easy access and a competitive interest rate? Or are you thinking about longer-term growth?
Both priorities are understandable, but they involve different considerations. Most people have never been asked the question directly, which is why it is one of the first things we talk about.
Two different jobs for your money
Cash savings can offer stability and access. Your balance does not fall in value and you know where you stand. The trade-off is that interest may not keep up with rising prices over the long term.
Investing introduces the possibility of growth alongside the risk of falls in value. It is usually suited to money you can leave alone for several years, so there is time to ride out the ups and downs.
The question that decides it: when will you need it?
Your answer may depend on when you’ll need the money. A simple way to think about it:
- Within the next year or two: an emergency fund, a car or a holiday. Easy access or notice accounts usually make sense.
- In a few years: a house move or a wedding with a rough date. Fixed rate savings or a Cash ISA can lock in a rate for a set term.
- Five years or more away: retirement or money you may pass on. Investing, often inside an ISA or a pension, could offer more potential for growth, with the risk of falls along the way.
Savings or long-term growth? For most people the honest answer is some of each.
Things worth knowing
You can put up to £20,000 a tax year into ISAs, in cash, investments or a mix. The Autumn Budget confirmed that limit stays and that tax on savings interest held outside ISAs rises from 6 April 2027, which makes using your allowance more valuable. We cover this in what the Budget means for you.
If you are weighing cash against investing, you may also find is keeping all your money in cash really risk-free? useful.
Talk it through
There is no single right answer, only the right answer for you. We are independent and family run and the first conversation is free. Ring us on 01772 864314 or read about our investment and tax planning advice.
The value of investments can fall as well as rise and you may get back less than you put in.
Want to talk this through?
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This article is for general information only. It is not personal advice and it is not a recommendation. The value of investments and the income from them can fall as well as rise and you may get back less than you invested. Past performance is not a reliable indicator of future results. Tax treatment depends on individual circumstances and may change. Fernleigh Wearden & Company Ltd is authorised and regulated by the Financial Conduct Authority, firm reference number 929372.
