As was well documented ahead of the Chancellor’s Mansion House speech, plans to reduce the annual cash allowance have been shelved, for now at least. This followed strong opposition from building societies and consumer campaigners who argued a reduction would penalise responsible saving and even destabilise the mortgage market.
While this move may offer short-term reassurance to savers, it also reignites a bigger question: is saving alone enough to grow your money in today’s economy - or should you be thinking about investing too?
Let’s break down the difference between the two and explore how each approach could fit into your future financial planning goals.
What’s the difference between saving and investing?
Both saving and investing involve setting money aside - but they work in very different ways:
Saving typically means putting money into a bank or building society account. It’s low-risk, easy to access, and earns interest over time. For example, if you save £100, you’ll still have your £100, plus a little extra from interest.
Investing involves buying assets like shares, funds, or bonds. These have the potential to grow more over time - but they also come with risk. The value can go up or down, and you could lose some or all your original investment.
Why this matters now
With ISA reforms on hold, many people may feel encouraged to stick with cash savings. But while cash ISAs offer stability and tax-free interest, they may not always keep pace with inflation - especially in a low-interest environment. That means your money could lose value in real terms over time.
Investing, on the other hand, offers the potential for higher returns, which could help your money grow faster than inflation - though it comes with more ups and downs.
Should you save or invest?
There’s no one-size-fits-all answer. Many people use a mix of both, depending on their goals, timeframes, and comfort with risk.
Saving may be better for short-term goals (like a holiday or emergency fund) where you need quick access and less risk.
Investing is usually more suitable for long-term goals (like retirement or a child’s education), where you have time to ride out market fluctuations.
How they compare
How you could grow your money wisely
Whether you save, invest, or do both, here are a few tips to help you make informed decisions:
Choose FSCS-protected and regulated providers.
Compare interest rates or investment options from trusted sources.
Match your approach to your goals, time horizon, and risk tolerance.
Final thought
The Chancellor’s decision to pause ISA reforms may have calmed concerns for now - but it’s also a timely reminder to think beyond just where your money is parked. Saving offers security, but investing may offer growth. The right balance could help you build a stronger financial future.
This article is for general information only and is not financial advice. If you’re unsure what’s right for your situation, consider speaking with a financial adviser. To find one in your area visit Unbiased.co.uk
