The terms saving and investing are often used interchangeably, but there are important differences. Here we’ll show you how they’re different.


  • You put your money into a bank or building society account, cash Individual Savings Account (ISA), or even a piggy bank.
  • The bank or building society pays interest on the money you save. This is paid without any tax being deducted, but you may have to pay tax on it depending on your personal circumstances. 
  • 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 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.


  • 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 that are tax efficient.
  • 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

Investments can go down as well as up, you may get back less than paid in.

Laws and tax rules may change in the future. The information here is based on our understanding in April 2020. Personal circumstances also have an impact on tax treatment.


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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