To save or invest?

Let's break it down. Smart decisions start with understanding your options.

 

The new tax year has started

Start the new 2025/26 tax year off by using your £20,000 ISA allowance. Take a look at our ISAs and see how you can benefit from tax-efficient saving. 

A guide to ISAs

Tax treatment depends on individual circumstances and may change in the future.

Browse ISAs

Consider your needs

Depending on your financial goals, a combination of saving and investing could help you to reach them.

When should I save?

Maybe you want to put some money aside to pay for a holiday, improve your home, or to tide you over in an emergency. Saving offers a short-term solution. Generally, they are secure and don’t suffer from large fluctuations in what you could get back.

Benefits of saving accounts

  • Suitable for short-term goals.
  • A low-risk way to grow your money.
  • No upfront costs.
  • Peace of mind of knowing what you will get back.

Make sure you consider

  • Early withdrawal fees could apply to some fixed-rate accounts.
  • Because you lock in your money, a fixed-rate account could give higher interest.
  • In exchange for flexible withdrawals, instant-access accounts usually give lower interest.
  • If your interest rate is variable, it may increase or decrease in line with the UK Base Rate.
Saving accounts

When should I invest?

Investing could help you build a pot of money towards a longer-term savings goal. Like the deposit for a house, to provide for your children, or just a more comfortable financial future.

Benefits of investing

  • Potential to earn higher returns.
  • Greater chance of beating inflation, compared with savings.
  • Suitable for medium to long-term goals, over at least five years.

Things to consider

  • Investments can carry higher risks, as the value of your investments can go down as well as up.
  • To weather market volatility, it’s best to hold investments for at least five years.
  • Having emergency funds can help you avoid accessing your investments prematurely.
  • Make more informed decisions by expanding your investment knowledge and seeking independent financial advice. There will be a charge for advice.
  • Account fees and charges apply.
Investment options

The value of investments and the income from them can fall as well as rise, and you may get back less than you invest. If you’re not sure about investing, you might like to seek financial advice. Just be aware that charges will apply.

Make saving second nature

Get off on the right foot

High interest on your borrowing could easily cancel out any interest you earn from saving and investing. So, it’s worth paying off any unsecured debts before you start saving.

Build an emergency fund, so you’ve got some cash handy. You can’t predict when your washing machine is going to break or when you need to pay for car repairs.

Commit to saving regularly

Now you’re ready to make regular contributions to your saving or investment account.

As each payday comes around, make sure you know how much you can afford to save or invest.

Focus on your goal

Why not set up a regular payment on or around payday each month? That way, you set aside the money before you’re tempted to spend it.

If you get a bonus or an unexpected windfall, that’s a chance to boost your savings or investments even more.

Make an informed decision

Only you can know if the best option is to save, invest, or do a bit of both. But some insight could help.

Looking back 10 years

The following table compares the performance of cash savings alongside investments over a 10-year period. Obviously, that doesn’t mean the same will be true in future, but it’s interesting all the same.

Graph comparing investing vs. savings over 10 years: £1,000 invested in S&P World Index (2015) is worth £2,659 in 2025; in a typical savings account it would be worth £1,229 in 2025.

Sources

Savings – MoneyFacts, 12m fixed non ISA rates, January 2025.

Investments – S&P Dow Jones Indices, S&P World Index (GBP). Excludes fees and does not include any dividends or reinvestment.

These figures refer to the past and past performance is not a reliable indicator of future performance. See a data breakdown of the performance in the table here. See a data breakdown.

Save & Invest calculator

Head to our app to try the Save & Invest calculator. It’s a great tool to see how your money could perform, depending on whether you save, invest or both.

  1. Log in and select Save & Invest
  2. Select Save & Invest calculator
  3. Select Try the calculator

Getting started in our app

 

Mobile banking app

  • Join our 1 million app users.
  • Simple and secure login.
  • Set up handy notifications.
More about our app

Mobile banking app

  • Join our 1 million app users.
  • Simple and secure login.
  • Set up handy notifications.
Download app

A look at the details

  • As prices rise on everyday goods and services due to inflation, the purchasing power of your money can decrease.

    Here’s very simple example to illustrate this

    Let’s say you save £5,000 for two years at a fixed interest rate of 2%.

    If you don’t make any withdrawals or deposits, after two years, you would earn £202 in interest, bringing your balance to £5,202.

    But if inflation increases by 3% per year, the adjusted purchasing power of your savings would be reduced to £4,895.

    If you can save at a rate of return or interest that exceeds inflation, this can help to protect the purchasing power of your money.

    Inflation can affect your savings. For example, if you save a sum of money last year and inflation increases, the money may not hold the same value as it did before.

    The inflation rate can also affect your investments and any potential returns. The real rate of return measures this. It's your annual growth percentage adjusted for inflation.

    Want to learn more?

    What is inflation?

  • The government sets a limit on how much interest or returns you can make from your savings or investments before you pay tax. This limit can change. ISAs protect you from paying tax on any interest you make with savings, as well as protecting investments from Capital Gains Tax, UK Income Tax and tax on dividends.

    Look at our guides to learn more.

    Your personal savings allowance

    Your ISA allowance

    Capital Gains Tax & tax on dividends

  • Choosing to save or invest your money depends a lot on your needs and financial goals. Ask yourself:

    • Do I need regular access to my money?
    • How much risk am I comfortable with?
    • What is my goal, and over what term?

    Saving may suit you if you’ve got a short-term goal, within five years. And you’re happy with lower, but more guaranteed returns.

    Investing may suit you if you’ve got more of a longer-term goal of five years or more. And you’re willing to accept more risk for potentially stronger returns.

    Saving and investing can work hand in hand and there is space for both when creating a financial plan. There’s nothing to stop you from putting money into both savings and investments, to help you manage both your short and longer-term goals.

  • It’s sensible to put some money aside as a safety net if there's an emergency. You can use it to cover your regular outgoings for a few months.

    Also, if you’re paying more interest on debts than you would be earning on a savings or investment account, aim to repay those debts first.

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Save and invest your way

Make the most of this year’s ISA allowance with ISAs that work for you.

Explore ISAs

Financial planning

Wherever you are in life, a financial plan can be your way forward.

Start planning

Understanding investing

However experienced you are, it's always good practice to make informed decisions.

Understand investing

Protecting your money

FSCS logo



The Financial Services Compensation Scheme (FSCS) protects up to £85,000 of the eligible money you hold with us.

More about the FSCS

 


Protecting your money

FSCS logo

The Financial Services Compensation Scheme (FSCS) protects up to £85,000 of the eligible money you hold with us.

More about the FSCS

Savings help and guidance

Explore our useful savings guides and the important factors to consider when thinking about your financial future.

Help and guidance

Savings help and guidance

Explore our useful savings guides and the important factors to consider when thinking about your financial future.

Help and guidance

Important legal information

Bank of Scotland Share Dealing Service is operated by Halifax Share Dealing Limited. Registered in England and Wales No. 3195646. Registered Office: Trinity Road, Halifax, West Yorkshire HX1 2RG. Authorised and regulated by the Financial Conduct Authority under registration number 183332. A Member of the London Stock Exchange and an HM Revenue & Customs Approved ISA Manager.