Don't sit on your cash

When interest rates are high, cash and money market accounts become popular. It means savers can receive an attractive guaranteed return on their money. However, it’s important to continue keeping an eye on the rate you can expect to receive, as rates rise and fall over different periods. Also, compare this to the impact of inflation over the long term, as it can be disappointing to find that your money can’t buy what you need it to.

Many people hold off from investing because they’re worried about their investments falling in value. This ‘fear of loss’ is understandable, as nobody likes to risk losing the money they’ve worked hard for. It is true that markets go up and down in value, but if you have a long-term horizon, there can be plenty of time for the markets to recover after a fall.

The investment world can be full of complex ideas and it can feel intimidating to step into the investment arena. It helps to start small, perhaps considering funds put together by experts in their field, alongside learning for new investors. Elsewhere in our Investment Basics hub we have a New to Investing series which aims to do exactly this.

People often need money accessible at short notice for various needs. However, there needs to be a balance between what you need for the short term and the long term. A general rule of thumb is to have savings that cover three months’ worth of living expenses, in addition to longer-term investments.