Savings & Investments
Saving and investing are often thought of as being the same thing, but they are different, and we aim to understand how each is to be used in our clients’ individual circumstances.
Saving
Saving is building up funds in cash, which will hopefully increase in value from interest that is added. It is used to perhaps provide a reserve to help cope with emergencies should they occur, or maybe to be able to make a large purchase rather than borrowing.
Typically, people save with banks and building societies, but also through National Savings & Investment products and it’s important to consider the interest rates available.
Investing
Investing is more about trying to grow funds in real terms, i.e. by more than inflation, over a longer period of time. It’s important to consider the amount of risk you are prepared to take and the length of time the money will be invested; to create a diversified portfolio, but also to identify the types of products that best suit your needs.
Tax efficiency
Whether saving or investing, tax efficiency is important and ensuring tax allowances are used effectively is part of financial planning for our clients. For example, making sure ISAs are used wherever possible, Income Tax and Capital Gains Tax liabilities are managed, but often nowadays, a potential Inheritance Tax liability is a significant consideration for our clients, particularly as personal pension funds will be included in people’s estates from April 2027.