Saving and Investing
What is Saving and Investing?
Whether it’s saving for a car, a holiday, or a deposit on a house, saving is about making sacrifices today that you will (hopefully) enjoy the benefits of in the future. Saving takes time, but is worth it in the end, especially when you earn interest on savings.
Investing is different to saving as it carries more risk, but also has the potential for higher returns. Investing involves buying something such as shares in a company, and hoping that the value increases when you come to sell the investment (i.e. that you gain a return on your investment.)
Investments don’t always increase in value - and sometimes they decrease in value - so there is more chance of losing money when investing than when saving.
There are lots of different ways to save, from putting cash under the mattress (not recommended) to opening a savings ISA with a bank or building society. Here's a useful guide on the different types of savings.
For more information on investing, including the different types of investment, visit:
Any interest earned on savings and investment is regarded as income and may, therefore, be liable to tax. An ISA (Individual Savings Account) is a way to save, earn interest, and not be taxed on the interest. ISAs are also referred to as tax-free savings accounts.
See the definition of ISA, and LISA in the Glossary of Money terms.
There are hundreds of banks, building societies and financial product providers that offer ISAs, Junior ISAs and LISAs.
It’s always worth comparing the best ISA deals available before deciding which one to invest your money in.
For some it seems a long way off, for others, it’s just around the corner, but we all want to look forward to an enjoyable retirement. It’s important to save for retirement because our earnings from employment or self-employment will end, meaning that we will need income from other sources to live on once we have stopped working.
The state pension is paid by the Government to everyone that has made sufficient National Insurance contributions during their working life.
A workplace pension is provided by an employer, and includes regular contributions from both the employee and employer, building a pension pot over time that can be accessed later in life.
Interesting Fact Research has identified a concept called “Future self-continuity” - when we think of our future self, we use the same mental pathways as if thinking about a stranger. That may explain why people find it more challenging to save for their retirement.
It’s never too late to start saving for retirement. Here are some useful resources on saving for retirement.
It’s possible (and very likely) for someone to have multiple workplace pensions, as each employer may use a different pension provider.
If you think you have previous pensions that you’ve lost track of, you can use the Pensions Finder service to locate them.
This is a common question about saving for retirement. The Pensions and Lifetime Savings Association have created a guide on how much you may need for your retirement based on different retirement living standards. For more information, visit:
Resource Zone
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