WEBVTT

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If you have money left at the end of the month, 
you may be wondering whether you should save or  

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invest it. In a perfect world, you'll have both 
savings and investments because each have a  

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different yet equally important role to play when 
it comes to helping you improve your finances.

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Your savings are there so you have money you 
can access in case something unexpected happens,  

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like the boiler breaking down, and also for 
short-term financial goals, those in the next  

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few years such as holidays, house deposit, or a 
wedding. Investments on the other hand help with  

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your long-term financial security because stock 
markets tend to produce better returns than cash  

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over time, so investing provides the potential 
to increase your wealth by more than if you just  

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leave it all in savings. There is additional risk 
involved though because stock markets fluctuate,  

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which is why it's important not to invest 
all your money and have some savings as  

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well. If you're only investing for a 
year or two and the stock market falls,  

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you've got less time for it to recover, so there's 
a high chance you could lose money. However,  

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this is less likely to happen the 
longer you keep your money invested.

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So how much money do you need in savings before 
you're ready to invest? Some suggest three months’  

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salary, others advise more, and there's no right 
or wrong here because it all depends on you and  

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your circumstances. To work out the right amount 
for you, consider things such as how much you need  

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to cover essential bills each month in case 
you're unable to work for any reason. Also,  

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if you were to lose your job, how long do you 
think it would take to find a new one? And is  

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yours the only salary coming into the household 
or is there another one to fall back on? For one  

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person, three months’ salary might be enough; but 
for somebody else they might feel they need more.  

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But one of the big problems here in the UK 
is that even when people do have savings,  

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many don't go on to invest and this 
is putting their future financial  

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security at risk because they face not having 
enough money to last them through retirement.  

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There's lots of research about why this is and 
two of the main barriers that have been identified  

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that people are scared of investing because of the 
risk and because they think it's too complicated.  

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Yes, there are risks, but there 
are also great potential rewards.  

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And there are steps you can take to reduce the 
risk and reduce the chance of losing money. Now,  

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I've already talked about the importance of time 
here. But another key thing is diversification.  

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You can spread the risk by holding a broad 
range of investments. After all no single  

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investment will be the top performer all 
of the time and in all economic conditions.

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So by holding a good spread the hope is that if 
one part of your portfolio isn't doing so well,  

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you'll have other investments that are 
faring better offsetting any losses.  

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Many people also worry that investing is 
complicated and not suitable for them. But  

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once they look into it in more detail and 
get started, they often realise it's not  

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as complex as it can first appear and there 
are plenty of resources to help. At Barclays,  

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we produce lots of content: articles, videos, 
and podcasts that are all free and available  

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to anyone. We also have a research centre to 
help customers with their investment decisions.  

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Complexity and risks aren't the only things 
that can put people off investing though.

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The fact we talk about it being something to 
help you in the future rather than the near  

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term also means that other things can feel more 
important, which is totally understandable.  

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But the sooner you start, the more likely 
you are to achieve your longer-term goals  

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and the easier it will be because you won't 
have to invest as much each month. Finally,  

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whether you're at the stage of building up your 
savings or are in a position to invest too,  

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putting away money monthly is a great habit to get 
into and it will help you reach your goals sooner.