Should you save or invest in 2026/27? Here’s what to consider

Whether you’ve received a bonus, had an inheritance, or have money to set aside from your regular income, you may be wondering how to make the most of it.

You want to grow your wealth by making your money work hard for you. But you also want to ensure you have access to the funds you’ll need and feel comfortable with the level of risk.

As such, you might find yourself asking: “Should I save or invest my money?”

There isn’t a simple answer to this question, especially at a time when future interest rates, inflation rates, and investment returns may seem particularly uncertain. But by weighing the pros and cons of each option and considering your personal circumstances, you can devise a strategy for growing your wealth.

Read on to explore key considerations when choosing whether to save or invest in 2026/27.

Consider when you’re likely to need the funds

It’s important to consider how soon you’re likely to need access to your funds before choosing whether to save or invest.

Saving

It may be wise to save money you’ll need in the short- and mid-term and consider investing funds you won’t need for several years.

Savings accounts offer a range of options for accessing your funds, with some carrying particular restrictions and charges for withdrawing your money.

• Easy access accounts generally keep your money readily available, although you may be limited to a certain number of withdrawals within a defined period.
• Notice accounts typically require you to give a few weeks or months’ notice before withdrawing your funds, with penalties for removing money before the notice period ends.
• Fixed-term accounts effectively lock your funds away for a period of six months to five years, with charges for withdrawing before the term ends.

Investing

Investing may offer less flexible access to your funds, depending on the nature of your investment portfolio. For example, bonds are typically held for a fixed term, meaning it can be very difficult – or impossible – to withdraw funds early.

If you invest in stocks and shares (also known as “equities”), you may be able to sell your investments at any time. However, investing in the stock market has historically delivered more favourable returns when equities are held for the long term, meaning this might not be a suitable option if you’re likely to need the cash in the short term.

What’s more, investing funds you’re likely to need in the short term could leave you with no choice but to sell during a downswing and reduce your chances of a positive return.

The bottom line

It’s usually practical to spread your funds across a mix of savings accounts and investments according to your access needs. Ultimately, the mix that works for you will depend on your financial circumstances and goals, so it might be worth speaking with a financial planner to devise a suitable strategy.

Balance accessibility against growth potential

While it might sound easier to keep your money readily available in an easy access savings account, it’s important to note that this could limit your wealth’s growth potential.

Saving

Easy access accounts usually accrue interest at a variable rate. In some cases, rates may initially be higher than those of a fixed-term account.

However, it’s important to remember that the interest rate could fall, while a fixed-term account allows you to lock in your rate for the duration of your term. For context, the Bank of England reduced the bank rate from 5.25% to 3.75% between July 2024 and April 2026 – and while rates may go up again as a result of the conflict in the Middle East, there is no guarantee.

Investing

Long-term investments have typically outperformed savings when it comes to growth. MoneyWeek reports that an individual saving £20,000 a year into a Cash ISA since 1999 could have a pot worth £418,176 by February 2026. However, someone who invested the same amount in a Stocks and Shares ISA could have amassed £1,357,964.

In this instance, investing would have delivered growth at a rate more than three times higher that of saving. That said, your own experience will vary depending on your investments and time period, and historical trends are not a guarantee of future performance.

The bottom line

Ultimately, if you’re building wealth for the long term, investing could offer higher growth potential than saving, although this is not guaranteed and values can fall as well as rise.

Ensure your strategy aligns with your risk appetite

It’s crucial to remember that “growth potential” does not mean the growth is guaranteed.

Saving

Other than limited growth potential, there is little risk to saving. Your money is protected by the Financial Services Compensation Scheme (FSCS) up to a limit of £120,000 per person, per authorised firm. So, if your bank or building society went into administration, your cash could still be safe.

It’s worth noting that, while saving is often deemed the “safer” option, it isn’t risk-free. Variable interest rates can fluctuate significantly, particularly in an uncertain economic climate. Plus, if your interest rate falls below inflation, the real-terms value of your savings could erode over time.

Investing

When your money is invested, there is no guarantee that you’ll earn a positive return. In fact, you could even get back less than you initially paid in, depending on the performance of your investments and when you choose to exit the market.

As we have seen throughout the first few months of 2026, the markets can be volatile. The FTSE 100 – an index of 100 of the largest companies listed on the London Stock Exchange – reached a record high in February 2026 before experiencing a notable downswing following the outbreak of war in the Middle East.

Such volatility isn’t unusual. Indeed, experienced investors will know that it’s an inherent characteristic of the stock market. As such, it’s important to consider your risk appetite when defining your savings and investment strategy. For example, you might choose to keep some funds set aside in a savings account and invest the rest.

Moreover, you could mitigate your risks and increase your chances of achieving your investment goals by:

• Selecting investments with suitable risk profiles for your preferences
• Curating a diversified portfolio spanning multiple asset classes, sectors, and geographies
• Planning to invest for the long term.

The bottom line

Whether you’re saving, investing, or using a mix of the two, a financial planner can help you define a strategy tailored to your risk appetite and goals to help grow your wealth.

Get in touch

If you’re looking to grow your wealth and are unsure of how to structure your savings and investments to suit your needs, get in touch for help creating a plan that works for you.

• Marnel Stafford: email Marnel.Stafford@fosterdenovo.com or call 07305 970959
• Ryan Edwards: email Ryan.Edwards@fosterdenovo.com or call 07591 758136

Alternatively, you can call our office on 0207 469 2800.

Please note

This article is for general information only and does not constitute advice. The information is aimed at individuals only.

All information is correct at the time of writing and is subject to change in the future.

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.