Should I save or invest?

That's a very good question. Weigh up your saving and investment options to find a combination that works for you.

Find the right tool for the job

Saving and investing can work well together, helping you to achieve your financial goals.

Reasons to save

With a savings account, you’ll usually get back everything you deposit, plus any interest you’ve earned. Types include ISAs, easy-access, and fixed-term accounts.

Benefits of saving accounts

  • A low-risk way to grow your money.
  • No upfront costs.
  • Suitable for short-term goals, such as saving for a holiday or a home improvement project.
  • Peace of mind of knowing what you will get back.

Things to consider about saving

  • Early withdrawal fees could apply to some fixed-term accounts.
  • Easy-access accounts usually have lower interest rates.
  • Can you afford to lock your money in? A fixed-rate account may have a higher interest rate.
  • If your interest rate is variable, it may increase or decrease in line with the UK Base Rate.
Ways to Save

Reasons to invest

Money invested over a longer-term can have greater returns than savings accounts, depending on interest rates, market conditions and risks. Investment types include bonds, stocks, mutual funds, stocks and shares ISAs, and exchange-traded funds (ETFs).

Benefits of investing

  • Potential to earn higher returns.
  • Suitable for medium to long-term investments – five years or longer.
  • Could help you to achieve longer-term goals, such as saving for a home deposit.

Things to consider about investing

  • Aim to invest for at least five years to withstand market fluctuations.
  • Investments can carry higher risks, as the value of your investments can go down as well as up.
  • Keep some money aside for emergencies so you don’t need to cash in your investments prematurely.
  • You may want to seek independent financial advice before you invest. Charges will apply.
  • You may benefit from developing your investment knowledge.
  • Trade commission and other fees will apply.
Ways to invest

You should know

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 might apply.

Get into a savings habit

Do the groundwork

Before you save or invest, it makes sense to pay off any high-interest debts. There’s no point in earning interest on savings if interest on loans or overdrafts wipes it out.

Your next priority could be to build an emergency fund. This is so you’ve got some money handy when you really need it. You might like to consider using an instant access savings account for this.

Balance needs and wants

Once you’ve got an emergency fund for all the things you need, then you can start saving or investing for the things you want.

If you put away some money regularly, over time you should start to see the benefit of this.

Have a plan

Knowing what you can afford to save or invest each month will help you to plan your next payday, and your longer-term financial future. The 50:30:20 rule could help you to get started.

Just like watering your plants

You could start by setting up a regular payment to a savings or investment account as soon as you get paid each month. If you allocate the money, you won't miss it or feel tempted to spend it.

If you receive a one-off lump sum, or a bonus from work, that’s a chance to boost your savings and investments further. Long term, this could all add up to a more comfortable financial future.

Decide what's right for your situation

Only you can decide whether it’s best to save, invest, or do a bit of both. The following tools might help you consider your options.

Watch your money work

While future performance isn’t guaranteed, it’s still interesting to compare cash savings performance with investment growth over a 10-year period.

 

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.

Source

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.

Do some basic maths

If you use our mobile banking app, you might like to try the save and invest calculator. It can help you to estimate the future potential of your money:

  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 9 million app users.

  • Simple and secure login.
  • Set up handy notifications.
  • Message us online.

Continue to app

Let’s look at the details

  • You can save or invest as much as you want. But the Government does set limits on how much interest you can earn before you have to pay tax.

    The interest on cash ISAs is free from UK tax. This means that, while some of your interest in other savings accounts may be subject to income tax, you don't pay any UK income tax on cash ISA interest.

    You don’t pay any extra UK personal income tax and UK capital gains tax, where applicable, on any potential money you earn from a stocks and shares ISA, innovative finance ISA or Lifetime ISA.

    Once you’ve reached your ISA allowance, you can put any other money into a general savings or investment account.

    Want to learn more?

    What is a stocks and shares ISA?

    Your personal savings allowance

    Tax on savings interest

    Your ISA allowance?

    Investments tax and ISA rules

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

    The inflation rate can also have an affect on your investments and any potential returns. The real rate of return measures this. This is your annual growth percentage adjusted for inflation.

    Want to learn more?

    What is inflation?

  • Whether you choose to save or invest really depends on your needs and preferences:

    • Do you need regular access to your money?
    • How much risk are you comfortable with?
    • What’s the goal, and over what term?

    Saving may suit you if you’ve got a short-term savings goal - within five years – and you’re happy to receive steady growth.

    Investing may suit you if you’ve got a longer-term goal – five years or more – and you’re willing to accept more risk in the hopes of stronger returns.

    Always keep in mind, with investing there’s a risk that you could get back less than you put in. For example, if you need to withdraw funds while market conditions are poor.

  • You can have more than one ISA. For example, you might like to have a low-risk cash ISA that helps you save for short-term goals and a higher-risk investment ISA that potentially offers higher returns over a longer term.

    Did you know: you can transfer an ISA from another provider to Lloyds. If you already have a Lloyds ISA, you can transfer it to another type of ISA with us.

    Learn more about ISAs

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

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Important legal information

The Lloyds Bank Direct Investments Service is operated by Halifax Share Dealing Limited. Registered Office: Trinity Road, Halifax, West Yorkshire, HX1 2RG. Registered in England and Wales no. 3195646. Halifax Share Dealing Limited is 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.