Should you save cash or invest?

5 minute read

We give you the lowdown on what to consider when weighing up whether to invest your savings.

Who's it for? Investors with basic investment knowledge

The value of investments can fall as well as rise; you might not get back what you invest. If you’re not sure about investing, seek independent advice.

When it comes to saving money and planning your finances, cash savings and investments are both important and each has a role to play.

Savings are ideal for short-term or unexpected expenses such as holidays or the boiler breaking down. But if you’re looking to build your wealth for the future, it’s worth considering investing because stock markets tend to perform better than cash over the longer-term.

However, this can’t be guaranteed as stock markets fall as well as rise, so you could get back less than you invest, which is why a combination of both savings and investments can be a good thing to aim for – save for a rainy day, invest for your future.

Cash v Investing – the returns

Over the five- year period from January 2019 to end of December 2023 holding money in a savings account would have produced different returns to investing in shares. The below table and graph shows the returns you would have earned over this period from depositing £10,000 in our Barclays Everyday Saver Account compared to investing in UK shares.

Barclays Everyday Saver 

UK Shares

Returns from savings held relatively stable over the five years and didn’t produce any negative results

Returns are positive in 3 of the 5 years

Returned 1.5%

Returned 34.9%

If it was held as savings it would be worth £10,151

If it was invested in UK shares it would be worth £13,489

Savings is represented by our Barclays Everyday Saver 

UK shares is represented by the FTSE All-Share which reflects around 98% of the UK market

Important information - This is an example and there are different savings and investment products available which would have earned different returns. Barclays Everyday Saver is an easy access savings account and there are other savings options available with us that could earn you a higher return. You should also bear in mind that the past performance is not a reliable indicator of future performance. Returns are not the same each year and in some years savings can outperform investments. Returns include compound growth where income is re-invested and have been calculated after fees and charges, which have been applied annually, and exclude inflation. Data source: Barclays internal.

Graph showing the total returns over a 20 year period

Watch our video to find out more

Listen to Barclays’ Savings and Investments Director, Clare Francis, on why you should consider investing your long-term savings.


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

In a perfect world, you'll have both savings and investments because each have a different yet equally important role to play when it comes to helping you improve your finances.

Your savings are there so you have money you can access in case something unexpected happens, like the boiler breaking down, and also for short-term financial goals, those in the next few years such as holidays, house deposit, or a wedding.

Investments on the other hand help with your long-term financial security because stock markets tend to produce better returns than cash over time, so investing provides the potential to increase your wealth by more than if you just leave it all in savings.

There is additional risk involved though because stock markets fluctuate, which is why it's important not to invest all your money and have some savings as well.

If you're only investing for a year or two and the stock market falls, you've got less time for it to recover, so there's a high chance you could lose money.

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

So how much money do you need in savings before you're ready to invest?

Some suggest three months’ salary, others advise more, and there's no right or wrong here because it all depends on you and your circumstances.

To work out the right amount for you, consider things such as how much you need to cover essential bills each month in case you're unable to work for any reason.

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

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

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

But one of the big problems here in the UK is that even when people do have savings, many don't go on to invest and this is putting their future financial security at risk because they face not having enough money to last them through retirement.

There's lots of research about why this is and two of the main barriers that have been identified that people are scared of investing because of the risk and because they think it's too complicated.

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

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

Now, I've already talked about the importance of time here.

But another key thing is diversification.

You can spread the risk by holding a broad range of investments.

After all no single investment will be the top performer all of the time and in all economic conditions.

So by holding a good spread the hope is that if one part of your portfolio isn't doing so well, you'll have other investments that are faring better offsetting any losses.

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

But once they look into it in more detail and get started, they often realise it's not as complex as it can first appear and there are plenty of resources to help.

At Barclays, we produce lots of content: articles, videos, and podcasts that are all free and available to anyone.

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

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

The fact we talk about it being something to help you in the future rather than the near term also means that other things can feel more important, which is totally understandable.

But the sooner you start, the more likely you are to achieve your longer-term goals and the easier it will be because you won't have to invest as much each month.

Finally, whether you're at the stage of building up your savings or are in a position to invest too, putting away money monthly is a great habit to get into and it will help you reach your goals sooner.

Cash savings

Generally, cash savings are appropriate for goals that are less than five years away – maybe you’re saving for a house deposit or are planning to get married, for example. Crucially, cash can provide peace of mind that the balance of your savings account won't suddenly fall just when you need it, which is important if you don’t have much time to wait for it to recover ⁠–⁠ it can also decline heavily in real terms, so make sure you’re aware of the impact that interest rates and inflation can have on your cash savings.

It’s worth having some cash savings for a rainy day – when life presents an unexpected expense or your circumstances change and you need to access money quickly. The amount you’ll need will depend on you and your circumstances – consider factors such as what your monthly outgoings are; whether you’re the sole earner in the household; how long you think it would take to find a new job if you were to lose yours. For one person, having three months’ salary will be enough but someone else might feel more comfortable with a year’s salary.

Many savings accounts allow you to take money out whenever you want, though some don’t permit withdrawals for a certain period of time. These tend to be the accounts that pay the highest rates of interest so this is worth bearing in mind when comparing savings rates.

Once you’ve built up your rainy-day savings and have enough to cover those short-term goals, you might then want to consider investing because while low risk, cash is by no means risk-free. You won’t lose money in cash but it often struggles to keep up with inflation so your spending power can fall over time.

Even with interest rates having risen recently, the returns you can earn on cash savings are lower than the current rate of inflation. Investment returns won’t necessarily beat inflation either, but over time they should give you a better chance of keeping pace with it.

However, before you commit your money to the stock markets, there are a few other things to consider. While you don’t necessarily have to be debt-free, you’re probably not ready to invest if you've got money outstanding on credit cards and loans or are regularly overdrawn so look to pay those down first.


If you’re planning your finances for the longer term – five years or more – investing offers the chance to get your money working harder because you should get better returns than you could from cash.

There will be periods when the stock markets fall, but there will also be periods when they’ll rise. The longer you keep your money invested, the more time it has to grow which reduces the risk of your investment falling in value.

It’s therefore worth considering for financial goals that are some way off, such as retirement and children’s education costs. And even if you don’t have a specific goal, investing can help in terms of building your wealth to provide you with greater financial security.

However, investing can feel daunting particularly in times of uncertainty, such as those we’re experiencing at the moment with inflation high, the ongoing war in Ukraine and worries that the UK could be heading for recession. It’s totally understandable to feel nervous, but when it comes to investing, it’s important to remember that the reason for doing it is to help your money grow over the long term. Therefore, try not to worry too much about what might happen in the near future.

Don’t put all your eggs in one basket

As well as time being a key factor, diversification is also important when it comes to investing.

When starting out, it’s common for people to buy shares in a single company. However, this is quite a high risk strategy because your fortunes are dependent on the performance of that one company. It’s therefore important to diversify and spread your money between different companies, sectors, geographical regions, and also different asset classes. That way, even if one company doesn’t perform very well, others will be doing okay. While not eradicating the risk completely, diversification can reduce the chances of you losing money.

You can do this yourself by buying different shares and bonds, but a simpler way is to invest in a fund, where your money is pooled with that of other investors and invested in multiple companies.

Wake up your money

Enjoy up to £1,000 cashback

If you have investments or cash elsewhere, you can earn up to £1,000 cashback if you transfer them to us by 30 August. You’ll need to register your details and transfer a minimum value of £5,000. Pensions aren’t eligible. T&Cs apply.1

Ready to invest?

The decision of whether to hold cash or invest is down to you and your long-term goals. The choice between saving and investing should be based on your individual circumstances and your life plans and ambitions.

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The value of investments can fall as well as rise. You may get back less than you invest. Tax rules can change and their effects on you will depend on your individual circumstances.

Smart Investor

To choose and manage your own investments from a range of funds, shares, ETFs and bonds, get started today by simply opening up an Investment (Stocks & Shares) ISA, Investment Account or SIPP Account with Smart Investor.

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