BBC money expert Iona Bain has advised savers under 65 to explore investing as ISA allowance changes take effect next April. The cash ISA limit will be cut from £20,000 to £12,000 annually, encouraging younger savers to consider stocks and shares ISAs instead.
Bain explained the difference between saving and investing: savings accounts offer a flat interest rate with no risk of losing money, but may lose value if the rate is below inflation. Investing involves buying assets like shares, property, or bonds, with potential for higher returns but also risk of loss. She noted that workplace pensions are already a form of investment.
To determine readiness for investing, Bain suggested three key checks: clear high-interest debts first, maintain emergency savings for quick access, and commit to investing for at least five years to ride out market volatility. She emphasised that starting with as little as £50 a month can build a significant sum over time.
Bain advised diversifying investments to reduce risk, warning against putting all money into a single company. While investing carries the extreme risk of losing everything, spreading investments across different assets can mitigate this.
