The past few months have seen speculation that the cash ISA limit could be reduced in a bid to get people to invest their money instead.
Plans for ISA reform by Chancellor Rachel Reeves might have been shelved for now, but the issue has reignited a bigger question: Is saving alone enough to grow your money in today’s economy – or should you be thinking about investing too?
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.
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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.
Kevin Brown, savings specialist at Scottish Friendly, said: “There’s no one-size-fits-all answer. Many people use a mix of both, depending on their goals, time frames, 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.
“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.”
