How To Plan Savings And Investments

Dreaming of the days you can retire somewhere sunny? Got your eye on starting that new hobby? Do you really just fancy spending quality time with your loved ones? Whatever your plans are for the future, you need a plan right now to help you get there. Here we look at how to plan savings & investments, what the differences are between the two, and how both can be beneficial.

What Is The Difference Between Savings & Investment?

Savings Explained

When you save, you put money aside. Little by little. Bit by bit. Maybe it’s every day. Maybe it’s every week. However you choose to do it, saving money usually means putting your money into cash products, such as savings account in a bank, building society, or cash ISAs. It could even be as simple as putting money inside a piggy bank.

Investments explained

When you invest, you take some of your money (make sure you have enough for a rainy day) and try to make it grow by investing in products that might increase in value over time. It’s not the same as simply putting money aside and leaving it alone. Investing involves using your money to try and work for you to give you a return. As with all investments, they carry more financial risk than a savings account and you could get back less than you invested. 

Savings vs investments

Another difference between savings and investments is a risk. When you save money, even if you don’t add to your pot for a while, you can potentially still have a pot of money to spend.  However, through investments, the value of investments can go down as well as up. So you could lose money in the long term. But your potential gains through investments could be bigger than being held in a cash savings account.

It’s important to have both savings and investments because they’re typically used for different things.

For example, you might use savings for short term, easy access goals including:

  • Booking a holiday
  • Buying a new car
  • Putting a deposit down on a house
  • Replacing a broken boiler – or any other unexpected emergency

Whereas you may use investments for longer-term growth:

  • Retirement
  • Achieving financial goals
  • Wealth management 

3 Strategies For Investing Money

Here are three things to consider when thinking about investing your money:

  • Start with a financial plan

A financial plan not only gives you a clear goal that you’re working towards but it also helps you figure out your risk tolerance at different points in your life. Sticking with a set plan also helps you stay disciplined and means you’re less likely to make emotional, rash decisions. 

  • Invest early rather than later

 The longer your money is invested, the more potential it has to grow. We speak to so many people who wish they’d started investing sooner in life. In a pension or cash ISA, you could benefit from compound interest, which means year by year your investment can potentially grow. An example of compound interest is below:-

Say you invest £1,000 in your Cash ISA at the start of year 1 with a growth rate of 1%. By the end of year 1, your investment could potentially be £1,010. In year two, with the same growth rate and no additional investment, your Cash ISA would be worth £1,020.10. If your Cash ISA continues along with a 1% interest rate, with no extra investment, for the next ten years, your ISA pot could be worth £1,104.62. This would mean that with very little financial risk, your initial investment has grown over 10% in ten years.

  • Get professional help and advice

A professional financial advisor can recommend the best way to reach your goals with the money you have. For example, would your money be better invested in stocks and shares ISA, cash ISA or something else?

ISAs & Pensions As Investments

ISAs and pensions are fantastic ways to invest your money and plan for your future. ISAs are great investment options for medium to long-term investments and with both cash ISAs and stocks and shares ISAs available to choose from, you can invest at a level of risk you’re comfortable with.

You can read about the difference between cash ISAs and stocks and shares ISAs here.

Pensions are particularly useful when it comes to retirement planning. The earlier you start planning for retirement, the better. It means it will be easier for you to reach your target and live a comfortable retirement. We can help you put together a retirement plan by advising you on your existing pension’s performance and make necessary adjustments if necessary to work towards your financial goal.

Why Is It Important To Get Advice On Your Investments? 

It’s important to get advice on your investments because you could be missing out on opportunities to maximise your savings – without even knowing. For example, with our help you could be saving in a more tax-efficient way that brings you closer to making your financial goals a reality. Methods of savings and investments change but professional financial advisors keep up to date with everything from market changes and tax updates to interest rates and fees to provide you with smart investment strategies that work for you.

Investment Advisors  

As investment advisors, we can help you plan for whatever you want your future to be. Whether it’s long or short term, and whether you’ve got a lot or a little, we can help you to find the best ISA to benefit you. Contact us to get started.


Important information: Our website offers information about investing and saving, but not personal advice. If you’re not sure which services are right for you, please request advice from Hilltop’s independent financial advisers. Remember that investments can go up and down in value, so you could get back less than you put in.

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