Planning

Leaving your money to grow

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If you save and invest wisely, your money could grow over time

Saving

Your savings grow over time because of the snowball effect of compound interest – or earning money on your money (capital). When you save money, you usually earn interest on your capital. The next year, you earn interest on your original capital and the interest from the first year, and so on. Even a small amount saved each month, say £50, can soon add up.

Whether you choose to save or invest depends on your financial goals.

Investing

With investments, there are three things you need to think about in order to get the best potential return:

  • How long you're able to leave your money (we recommend that you invest for at least five years)
  • How tax efficient your investments are
  • How much risk you're comfortable with.

Planning

When planning your finances, think about your short-term, medium-term and long-term goals, and how much money you need for them. This will give you an idea of how much you need to save or invest over different periods. Stock market investments normally need a commitment of at least five years. Clearly, the longer you're able to leave your investment untouched, the more opportunity there is for it to grow.

The value of investments (and any income received from them) can fall as well as rise and you may not get back what you invested. For some investments this can also happen as a result of exchange rate fluctuations as shares and funds may have an exposure to overseas markets. You should aim to invest for at least five years. The value of tax treatment will depend on your individual circumstances and may be subject to change in the future.

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Need financial advice?

We can help give you expert advice for your individual circumstances.

See how we can help

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Everyone's circumstances are different and what applies to one person may not be right for someone else. The suggestions above are based on a general assumption of each planning event and they are not intended to provide advice or recommendation on your individual financial needs.

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