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Is Your Money Working Hard Enough?



Savings and investment both have a role to play in your long-term financial plans

2 min read

Savers looking to grow their long-term wealth could consider making the leap to investing.

We all like to try and put a little money aside. Some may be putting money aside for a specific goal, like a home by the sea or a valuable piece of art; others are simply growing their family wealth for the next generation.

Whatever your goal, it’s worth making sure that your money works as hard as you do.

Many people use a bank account for their savings. That’s a good idea in a lot of situations. When you save in a bank you’ll normally know how much you’ll get. And if you keep putting money in, the amount in your account won’t go down.

“One way to get a potentially above-inflation return is by putting money into investment assets.”
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Many people find this dependability reassuring. But in the medium to long term the spending power of your money could be falling, even as the amount in your account goes up.

That’s because inflation is currently much higher than the interest being offered on savings. The best savings accounts currently yield around 2%. But with inflation running at 2.9% (as at August 2017) the money you put aside will lose its spending power over the longer term.

One way to get a potentially above-inflation return is by putting money into investment assets. This could include things like stocks and shares, bonds from governments and corporations, commodities such as gold or oil, or commercial and other investment properties.

Many people invest in these assets through investment funds, which allow investors to pool their money and build up a mixed portfolio that spreads their risks across different types of asset. Investment returns can be variable, so you won’t know exactly what you’ll get. And the value of investment assets can fall as well as rise, so you may end up with less than you put in – especially in the short term.

But this variability means that investment assets have the potential to rise in value faster than the interest offered in a savings account. Historically, this has been faster than the level of inflation over most time periods, although of course there’s no guarantee that future returns will match past performance.

What's The Difference between saving and investing?

  • Investing

    • Can be unpredictable
    • Can go up and down


    • Predictable
    • Usually rises steadily if you keep paying in and getting interest
  • Investing

    • Amount you put in
    • Changes in price of the shares, bonds or other assets held
    • Charges from investment manager
    • Dividends from shares
    • Income from bonds


    • Amount you put in
    • Bank charges
    • Interest from the bank
  • Investing

    • Can substantially outperform inflation


    • Currently delivers below-inflation returns
  • Investing

    • Most suitable for the medium to long term


    • Most suitable for short-term saving
  • Investing

    • Depends on product – many investments allow you to take your money out at any time, especially if you’re investing through a fund


    • Depends on product - some higher interest accounts can have early withdrawal penalties
  • Investing

    • Depends on product - many investment funds allow you to get started with as little as £500 and make regular deposits from £25 a time.


    • Depends on product - some high-interest savings accounts require deposits of £1000 or more.

If you know you’ll need a set amount of money in the next 12 months, for example, then regularly depositing in a savings account may be the best solution. But for more ambitious, longer-term goals, investing provides the potential for better returns.

We’ve created Coutts Invest to make investing easy. If you are over 18, resident and domiciled in the UK and are using Coutts Online then you could get started with as little as £500.

Click the here to find out more.

Key Takeaways

If you are holding cash in a bank account you could consider investing your money rather than leaving it in the bank. Savings have the advantage of being dependable and predictable, but in the medium to long term investing your money in assets such as shares and bonds has the potential to offer a better return and protect your spending power. 

About Coutts investments

With unstinting focus on client objectives and capital preservation, Coutts Investments provide high-touch investment expertise that centres on diversified solutions and a service-led approach to portfolio management.

Discover more about Coutts investments