When you keep your money in savings, you won't see the value go down. But if you keep money in savings for a long period of time, rising prices (inflation) means your money may not have the same buying power when you come to spend it as it did when you put it away.
Investing isn't the same as putting your money in savings where its value can't go down. When you invest, you tie your initial outlay – sometimes referred to as your capital – to the performance of assets such as shares or bonds, with the hope that the capital will increase. As the value of the assets rises and falls, so does the value of your investment.
For many it’s about finding a balance between savings (where the risk is your savings might not keep up with rising price inflation) and investments (where your capital is at risk so you could get back less than you put in).
The table below shows you what the difference is between saving and investing with Santander.
|Things to consider||Saving||Investing|
|Capital at risk||No||Yes|
|Suitable for short term goals||Yes||No|
|Potential for higher returns||No||Yes|
|Initial deposit / investment||From £1||From £20 per month or £100 lump sum|
Having some money in savings is widely accepted to be a good thing. But if you’ve already got a good savings pot, check the interest you are earning on it. How does that compare to inflation? (Inflation rates are published every month so are easy to find online.)
Ask yourself, am I missing an opportunity? Could I be making my money work harder by moving some of it into investments?
Read more about saving vs investing