• You put your money into a bank or building society account, cash ISA, or even a piggy bank.
  • The bank or building society pays interest each year on the money you save.
  • If you save into a cash ISA, you don’t pay tax on any interest you earn.
  • You can save for as long or as little time as you want and you’ll usually have instant access to your savings unless you’ve opted for a fixed term account.

Plus side

Your money is relatively secure and you can usually arrange to access it whenever you like unless you’ve specifically chosen a fixed term account.

Down side

The interest you get is unlikely to cover inflation, which means your money probably won’t grow in value in real terms. Of course, you’ll get no interest from saving in a piggy bank.

It can be hard to cut through the jargon to understand the differences between saving and investing. It’s important you do though so you make the right decision about what to do with your money.


  • You put your money directly into investments such as stocks and shares or bonds, or indirectly through funds, with the aim of growing the value of your money.
  • There’s greater potential for your money to grow in value than if you put it in a bank or building society account, although there’s also greater risk of it falling in value.
  • Pensions and stocks & shares ISAs are types of investments. If you invest through a Stocks & Shares ISA or a pension, you can minimise the amount of tax you pay.
  • When you invest your money, you should usually keep it invested for at least five years. And when investing in a pension, it’s likely to be for a much longer timeframe.
  • With a stocks & shares ISA you can cash in your investment at any time, although with a pension you can usually only access your money when you reach a certain age.
  • Certain investments, such as property, can take longer to sell than others. So you may not be able to sell when you want to or get the price you were hoping for.

Plus side

Your money has more potential to grow in value and beat inflation over the medium to long term (at least five years).

Down side

There’s no guarantee your money will grow in value; it could fall. You could end up with less than you paid in.


If you need access to your money in anything less than five years, saving may be more appropriate. This is because you may not have time to recover any losses if your investments fall in value.

The information contained here should not be regarded as financial advice. The right option for you will depend on individual circumstances.

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