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  • Should I save or invest?

    How to decide what to do with your money.

    Should I save or invest

    Important notes

    This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

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    Whatever your goals, saving and investing are ways to tuck away money now, for the chance to have more in the future.

    Saving tends to be for the short term, while investing is for longer term. In the short term, it’s a good idea to build up ‘rainy day’ cash savings you can easily withdraw if you need to. Longer term, you might want to consider investing as a way of growing your money.

    Below are the differences, so you can decide what’s right for you. This article isn’t personal advice, so if you’re not sure what to do, please seek advice.

    Saving – I need the money within 5 years

    While cash savings won’t fall in value, they’re not risk free. Cash often struggles to keep up with rising prices, or inflation, so you can lose money in real terms.

    How inflation can affect your savings:

    MILK
    1990 2024
    29p 66p

    FOOTBALL TICKET
    1990 2024
    £5 £41

    Source: Office of National Statistics and Statista

    When should I save?

    • You’ve got a short-term goal in mind, like a holiday, wedding or even a house purchase
    • It’s your just-in-case money – if the boiler breaks, or you’ve had a change in circumstances
    • You want to be able to access your money straight away

    More on how much cash you should hold

    If you’re looking to boost your cash returns, the Active Savings service could help. Choose from a range of easy access and fixed term products to hold your different savings pots under one roof.

    We also offer a Cash ISA if you're looking to shelter your cash savings from UK income tax. Tax rules for ISAs can change and their benefits depend on your personal circumstances.

    More on the Cash ISA

    Investing – I won’t need the money for 5-10 years

    Investing involves spreading your money across different areas which aren’t cash. It can help you to grow your money over the long term. But unlike the security offered by cash, investments can fall as well as rise in value, so you could get back less than you invest.

    Here are some of the main ways to consider investing your money:

    • Shares – you’re buying a part of a company, in exchange for a share in how it performs. They trade live on a stock exchange, where different companies are bought and sold.
    • Bonds – issued by companies or governments, to help them finance their processes. In simple terms, you’re buying a portion of their debt – hopefully in exchange for an interest payment and your money back at the end.
    • Property – sometimes called real estate. It often refers to commercial instead of residential property.
    • Funds – individual investors give their money to a fund manager – who invests all the money, choosing investments on everyone’s behalf based on the fund’s objectives. They aim to grow the money over time, produce an income, or a combination of both. You’ll pay a fee to own a ‘unit’ in a fund, in exchange for the manager’s expertise and time spent looking after your money.

    When should I invest?

    • When you’re willing and able to accept a level of risk – and won’t need the money for at least five years. With investing, there’s no guarantee of making money and you could get back less than you invest
    • When you want the chance to grow your money more than you could with cash
    • After you’ve saved a supply of cash you can access easily for emergencies. As a general rule, we suggest holding 3-6 months worth of essential expenses if you're working, and 1-3 years if you're retired

    The Active Savings service is provided by Hargreaves Lansdown Savings Limited (company number 8355960). Hargreaves Lansdown Savings Limited is authorised and regulated by the Financial Conduct Authority (firm reference number 915119).

    Hargreaves Lansdown Savings Limited is authorised by the Financial Conduct Authority under the Electronic Money Regulations 2011 with firm reference 901007 for the issuing of electronic money. Hargreaves Lansdown Asset Management Limited and Hargreaves Lansdown Savings Limited are subsidiaries of Hargreaves Lansdown plc (company number 2122142).

    Important notes

    This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

    Saving or investing: what next?

    Boost your cash savings

    Pick and mix savings products from a range of UK banks and building societies, through one online account

    Learning more about investing

    What we think you need to know about investing; from rules of thumb, to understanding how to make the right decisions.

    Take your first step

    To start investing, you'll need to open an account.

    Whether you're building a pension pot or saving for something specific, try our filter to find the one which suits you best.