Saving is undoubtedly a good habit to nurture. But Savings and Investment products are distinct, and it is important to distinguish between the two offerings.



 

Savings 

 

These products usually provide for a specific short-term need or purchase, like a holiday or a new car, and are generally funds that you can set aside today but that you have immediately accessible – if the need arises.The most common savings vehicle is a bank account of one kind or another. In an emergency, you can immediately withdraw some or all of the money you’ve deposited – £1 back for every £1 you’ve put in, (and possibly some interest on top).
 


 

Bank Accounts

 

Current accounts may offer a very low rate of interest (if any), but they are the most flexible in terms of accessing your money. Banks also offer savings accounts, offering a higher rate of interest, and also notice accounts, which have more competitive interest rates, but as the name implies, you have to give a certain amount of notice before making a withdrawal (perhaps up to 60 or 90 days); or invest the money for a set minimum period of time.
 

 


New Individual Savings Account - NISA is a tax-efficient product through which you may invest up to £20,000 cash annually, and some providers offer instant access to a Cash ISA without penalty.
 


 

Investments

 

Investments are designed to be held for a longer period of time, usually at least 5 years. So you should not consider investments until you already have some savings in place.
 
Most investments offer the prospect of a potentially higher return than deposit accounts, but there are no guarantees, and you should be comfortable tying up your capital for a longer period of time.

 

Contact us before making any decisions. We will always explain the risk of any potential investment in detail.
 

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  • Institute of Financial Services
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