Investment Planning
What’s the difference between saving and investing?
Saving is a stage on the way to investing. You cannot be an investor without being a saver – but you can be a saver without being an investor.
When someone talks about savings and saving money, it could be referring to a piggy bank on the mantelpiece or a high interest deposit account. Savings are effectively cash or cash instruments, such as deposit accounts or term bonds.
Investing is what you can do with the savings you have created – if you are looking to generate a return on your money that is greater than what is already available to you through cash or deposit accounts.
What can we do for you?
There is no ‘one size fits all’ approach when it comes to investing money. We must consider your personal objectives, appetite for risk, and ensure that we utilise the various valuable allowances available to you in order to invest in the most tax efficient way possible.
ISAs
Individual Savings Accounts (ISAs) represent a tax-efficient container in which to place cash savings and investments in equities, bonds and collectives.
Junior ISAs
Individual Savings Accounts for children or Junior ISAs were introduced in November 2011 replacing Child Trust Funds.
General Investment Acounts
Allow the investor to hold investments outside of tax wrappers such as pensions or ISA. Useful when your allowances have been utilised for the year.
Investment Bonds
Capital Investment bonds are life insurance contracts used for the purposes of investment.
National Savings Products
The least risky of investment options are those offered by National Savings, which raises money on behalf of the UK Government.
Why save?
Often, people save for a specific reason. It’s usually the safest way to build up a pot of money for a short term (less than, say 2 to 5 years) financial goal.
It’s less risky than investing, but it offers limited growth. The most you’ll earn on the money you save is the interest added. Saving is perfect for people who don’t want to take any risks with their money, and most savings accounts have easy access or are for a fixed term.
As a saver, you will be taking very few and very small risks with your money. There will always be the risks of inflation though.
As an investor you are taking a much greater risk. Not only is the return on offer to you likely not to be fixed or guaranteed, the capital sum you invest is at risk as well.
So why would anyone want to take such risks? The short answer, of course, is because the potential rewards may be greater and you want to generate more from your money than is possible by simply leaving it in a bank or building society deposit account.
What should I do now?
Since there are so many different types of savings and investments, and there are potential risks with investments in particular, it is wise to seek expert advice which can be tailored to suit your own circumstances.
The value of investments and the income they produce can fall as well as rise. You may get back less than you invested.
Tax treatment varies according to individual circumstances and is subject to change.
