Services

With a broad range of account types, free expert coaching, smart planning tools and competitive pricing, we have all you need to make your money work hard for you.

Investing

Simply choose what type of account you want and then pick from our wide range of individual investments, funds, or Ready-made Portfolios.

Pensions

Whether you’re still building up a pension or nearing retirement we can help.

Pensions with Bestinvest

At retirement

Pensions for beginners

Learning

Whether you’re new to investing or looking for insights from our investment team, we’ve got you covered.

New to investing?

Guides and tools

News & events

Stay up to date with the latest news, events, insights and investment ideas from our experts.

News

Events

Investing 101

1. What is investing?2. Where do I start with investing?3. Accounts - a home for your money 4. What can I invest in?5. Building an investment portfolio 6. Investing versus cash savings 7. Charges, fees and costs 8. Investment regulations explained 9. Compounding explained 10. What is investment risk?

6. Investing versus cash savings

This lesson gives you the pros and cons of investing and cash savings

The value of your investments and the income from them may go down as well as up, and you could get back less than you invested.

What is inflation?

Inflation is the rate that prices for clothes, food, travel and the like go up. Inflation fluctuates and if it’s high, the interest rate on your cash savings account probably won’t keep up with it. So how much you can buy, or your ‘buying power’, actually decreases – even if your cash savings account balance is going up.

Investing means taking a bit more risk upfront to get potentially more money later.

Some cash savings are necessary

It’s always a good idea to have some cash savings set aside in case you need them. You don’t want to cash out your investments for an emergency that came out of the left field!

As a guide, it’s worth building up a pot of money in an easy-access savings account of 6 months’ worth of essential spending.

What are the pros and cons of cash saving vs investing?

	Cash savings	Investing
Pros	There’s little risk of losing money.	Your money could grow faster than it would in a cash savings account, and faster than the ever-rising living costs (inflation – see below).
Pros	You always know how much money you have, so you know whether you can afford what you’re saving for.	If you leave your money invested for a number of years, the effect of compounding means the money you make from investing could also make more money.
Cons	Interest rates on cash accounts rarely keep up with rising living costs.	Your investments can go down in value and you could end up with less than you started with.
	You might have to pay in a lot more than you would with an investment account to achieve the same goal.	With most investments, you can withdraw your money whenever you want, although you usually have to leave it for at least a few years to see a good amount of growth. Some investments can be harder to sell – these are known as ‘illiquid’.
	In exchange for a higher interest rate, some cash savings accounts make you lock away your money and throw away the key for a certain number of years or pay a fee to withdraw it early. They’re known as ‘fixed rate’ or ‘fixed term’ cash savings accounts.