Saving & Investing Basics

Saving is a way of storing your money until you need it while earning some interest, while investing is about putting your money to work for you by taking calculated risks to try to make it grow.

Ideally, you should save for what's around the corner and consider investing for your long-term financial goals. Here are some examples: 

Save for unexpected costs:   Before setting aside money for anything else, you should build up an emergency fund (3 to 6 months’ worth of living costs) as a safety net. Keep this in an easy-access savings account that you can dip into.

Save for things you plan to do in the next 5 years:   Once you have your pot for unexpected costs, you could start saving towards your short-term goals, like a car or a big holiday.

Invest for things you plan to do in the long-term:   For longer-term financial goals, such as a nest egg or holiday home, investing could help you get more from your money. 

Think of investing in the same way as buying a home. In the short term, the value of the property could fall, and you could lose money by selling before the housing market has a chance to recover. However, if you plan to stay put for many years, you hope the property will go up in value by the time you’re ready to sell.

Likewise, plan to invest for as long as possible – ideally for at least five years. This way, you’ll give your money the chance to recover from any dips in the market and give it a better chance to grow. Although there are no guarantees as the value of investments can go down as well as up.

Get the facts about investing

When you understand the facts about investing, you may feel more comfortable getting started.

• You don’t need to be rich to invest
• Investing always comes with a degree of risk
• Investing can be as simple or as complex as you make it
• Decide how much risk you are comfortable with
• Be in it for the long-term
• Stay invested if you can
• Stay diversified to help spread your risk
• Keep calm and become a smart investor