Savings and Investments

Savings and investments range from everyday bank deposit accounts to more complex financial products designed to deliver high returns. But all savings and investment options have a simple aim: to protect, and if possible grow, the value of money invested in them.

Most savings accounts will offer you a fixed rate of interest. Usually, this rate depends on your account’s balance and how much notice is needed before you can make a withdrawal.

If you invest, you’re probably aiming for better returns than you would receive from a savings account. Unit-linked investments can benefit from capital growth which refers to a growth over time in the value of the shares which underpin this type of investment.

It’s always important to remember that the value of investments can fall as well as rise. That’s because their value depends on how well whatever they have invested in has performed. The exception is government bonds whose value is guaranteed by the state.

If you’re choosing whether to save, invest or do both, you should consider three important things: your current financial situation, your future goals and your appetite for risk. Having a no-obligation chat with an Ask Acorn financial advisor will help you learn how we can help protect and grow your wealth.

The easiest way to start a savings plan is to talk to an Ask Acorn financial advisor about your financial plans for the future. This will help identify how much you should save and the most suitable way to save.

Questions to consider might include when you may need access to your money. For example, are you saving to cover school or college fees you’ll face in ten years’ time or do you want funds available now to cover emergencies or unexpected expenses?

To begin with, you need to know why you’re saving and what’s achievable. Talking to an Ask Acorn financial advisor will help you answer these important questions.

The first step in setting savings goals is being clear about your current financial situation. To do this, you should subtract your mortgage and loan payments and other regular expenses, from your total income. Then sort your savings aims into ‘essential and ‘optional’ goals.

‘Essential’ would cover important costs such as future education fees, necessary home improvements etc. ‘Optional’ savings goals could include holidays or car upgrades. What’s in either category depends on you.

Finally, because your priorities and personal circumstances will probably change over time, you should review your savings goals regularly.

A bank deposit account will pay you a fixed rate of interest. This makes it easy to calculate how much your money will grow if interest rates don’t change.

Investment plans offer the potential of a higher return than you would get from a standard deposit account. However, depending on where your money is invested, it could also decline in value.

Whether you choose a bank deposit account or an investment plan depends on your personal goals and your tolerance of financial risk. An Ask Acorn financial advisor will help you decide by mapping out options that will suit your financial goals and personal needs.

There’s usually some risk involved whenever you invest. Naturally, this depends on how and where your money is invested.

By their nature, some investments are riskier than others. For example, it’s easier to predict how a long-established company in a mature sector (for example, food or pharmaceuticals) may perform than a start-up in a new industry.

If you are uncomfortable with risk, you might prefer more stable investments such as government bonds. However, most investors usually aim to create a portfolio that balances less risky investments with ones that offer good possibilities for growth. This approach would help protect your investment while giving it a chance to grow.

An Ask Acorn financial advisor will carefully check your attitude to risk before making any savings or investment recommendations.

Investment bonds buy into a variety of different unit-linked funds that invest in equities (stocks and shares), unit trusts and government bonds. These funds are divided into units of equal value and aim to give you a better return than standard deposit accounts, especially in the long term.

If you have a lump sum to invest, an Ask Acorn financial adviser can take you through everything you need to know.

As your children get older, you’ll face many different costs – particularly relating to their education. Investing in a dedicated savings plan or investment bond as early as possible can help you cover these expenses.

At the same time, life cover offers the peace of mind of knowing they will be financially secure if anything happens to you. Finally, your loved ones could benefit if you invest in life cover to offset inheritance tax. Taking this step would help protect them from a tax burden after your death.

There are many ways you can invest to help secure your children’s future. An Ask Acorn financial advisor can help you decide which is most suitable for you.

Building an emergency fund that would cover 3 to 6 months of living expenses is a very sensible savings goal.

To achieve this, you should set up a standing order that will transfer a regular, affordable amount to a dedicated savings account, as close to payday as possible. You’ll soon readjust your budget to work with what’s left.

Becoming a smart shopper will also help you save money. This means reducing non-essential spending, comparing prices and taking advantage of discounts and special offers.

Many apps and online resources are available that can help with personal budgeting. If these help you reduce your spending, you’ll have more to save.

Finally, take time to meet with an Ask Acorn financial advisor. Sitting down for a full financial review can reveal other ways you can spend less and save more.