Money Talks: The Power Combo Your Wallet’s Been Waiting For
Not long ago, I read about a young guy in his twenties who decided he was done with investing. After losing money during a bit of market chaos (cheers, tariffs), he bailed out and parked everything in a cash ISA. “It’s simpler,” he said. “Feels safer.”
And you know what? I get it. There’s something comforting about a fixed rate, a nice round number, and knowing your money isn’t going to nosedive overnight.
But here’s the thing: while saving is smart, relying only on savings to build wealth is like showing up for a hike in flip-flops and wondering why you never reach the summit.
If you want to move forward financially, it’s not a choice between saving or investing. You need both. And once you get the balance right? That’s where the magic happens.
Why cash alone won’t cut it
Let’s talk cash ISAs. Right now, you might find a rate around 4–5% if you’re lucky (or new to the platform). Sounds pretty good, right?
But if inflation is, say, 3.5%, then you’re barely making any real progress. And once those intro bonuses drop off, many savers are left with returns that don’t keep up with rising costs. Plus, interest rates are starting to fall again, so that lovely fixed rate might not be so lovely next year.
So yes, your money’s not going down — but it’s not exactly flying high either.
Investing: It’s not just for City types in suits
Here’s the part most people find scary: investing. It feels complicated, risky, even a bit… elite. But let’s strip it back.
Investing isn’t about picking the next Apple or timing the market like some kind of financial fortune-teller. It’s about owning a small slice of the pie — companies, industries, the global economy — and letting time do the heavy lifting.
Take the S&P 500 – an index that tracks 500 of the biggest companies in the US. Over the past 50 years, it’s delivered an average annual return of around 10%. And even after some bumpy times, it’s bounced back — in fact, since December 2022, it’s risen by around 24% in under three years.
That’s not a fluke. That’s the power of sticking with it.
Enter: The Peace of Mind Fund (a.k.a. your financial cushion)
Before we go wild with investments, let’s talk foundations.
You’ve probably heard of an “emergency fund” — but I like to call it a Peace of Mind (POM) fund. Why? Because it’s not about bracing for disaster; it’s about buying calm. That fund sitting there, ready for the car that won’t start or the boiler that packs it in — that’s peace of mind.
Aim for three to six months’ worth of essential expenses. Keep it in an easy-access account, not buried in a 90-day notice pot. That’s your safety net, and it lets you invest the rest of your money with confidence.
What to invest — and how much?
So how much should you invest?
Honestly? As much as you can.
If you don’t have a workplace pension (or any pension at all), try to work up to investing 15% or more of your income. If you do have one, consider topping it up with a stocks and shares ISA — you can invest up to £20,000 a year, and the gains are totally tax-free.
You don’t need to be rich. You don’t need to be an expert. You just need to start.
And no, you don’t need to day trade or spend hours researching stocks. A simple, low-cost, globally diversified index fund does the job for most people. Set up a monthly direct debit, sit back, and let the years do their thing.
Recap: Your power trio
To bring it all together:
- POM Fund = your comfy cushion. Sleep easy.
- Cash savings = setting money aside for what I call your “Sometimes Spends” – things like Christmas, birthdays, holidays, dentist visits, the optician, car servicing… the not-every-month stuff that still always comes around.
- Investments = future freedom. That long-term growth that builds real wealth.
When you have all three working together, you’re not just surviving — you’re giving yourself options. Confidence. Freedom.
Final thoughts
That young guy who bailed on investing? He’s not alone. A lot of people are playing it safe right now. But let’s not confuse safe with smart.
Saving is great — necessary, even. But if you want your money to grow, not just sit there quietly sipping 4%, you’ve got to bring investing into the mix.
So build your Peace of Mind fund. Save for what you’ll need soon. But invest for the life you want later.
Because future you? They’ll thank you for it.
Please note: I am not a financial adviser and this column does not constitute financial advice. Always do your own research or speak to a qualified financial advisor before making investment decisions. All investments carry risk, and the value of your investments can go down as well as up. Past performance is not a guarantee of future results.
Thank you for your time.
You can contact me at info@fannysnaith.com