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Our recent articles have been keeping you updated on inflation and bank interest news.
In fact, most people will reduce the frequency of consumption during this special period and save money instead.
Maybe you’re wondering how to get the most out of your money to get through a rough year.
Cash Saving or Investing?
Despite the impact of low interest rates and high inflation, cash savings is still a safe way to manage your money.
You can easily get more returns just by putting money in a bank account or some sort of wealth management product with a fixed interest rate.
Sometimes you may find that the interest rate fluctuates, but at least you will be clearly informed when you will receive the benefit.
If you choose to invest, this may be buying stocks, funds and bonds or other types of investments.
As for making money or losing money, it all depends on your investment performance.
Investment risk is greater than savings, so investment should be cautious.
Cash Savings
The advantages of cash savings are obvious.
You might think that putting your money in the bank will only get you low interest, but it’s only a lot more money.
You don’t need to worry about losing money at all and you can even get your principal back at any time.
The only downside may be that your interest rate is below inflation, which may lose some of the interest you would otherwise have earned.
Investing
The benefits of investing are entirely dependent on your investment performance.
If you know the market or know the stock market well, it’s possible to earn profits above inflation with the right investments.
The disadvantage of investing is instability and high risk.
You need to pay extra attention to the movements of the broader market and even any small changes in the financial markets.
If you are a first-time investor, you should understand that investment profits are tax-free.
You can invest up to £20,000 per tax year and pay no tax on the profits.
You also don’t need to declare your stock and share ISA on your annual tax return.
But most importantly, never put all your eggs in the same basket.
If you have enough capital, a combination of saving and investing can help you reduce stress during inflation.
