Extra money can always be saved or invested. With savings, you simply put your money aside without risks. Saving is usually a way to raise your money safely with the use of interest. In investments, your money can potentially grow bigger, but the returns are not always guaranteed. For long-term goals, investing is seen as a more reliable way to raise money.

Let us learn about the various types of savings and investment products by reading the sections found below.

Types of Savings Products

• Banks and Building Societies

By saving your money in a bank, you can expect to gain the money you deposited plus the advertised interest rate. Usually, the bank would offer a wide range of accounts to choose from. The key differences lie mainly on how quick you can withdraw your money, the type and rate of interest, and the minimum amount required to keep the savings account open.

• Individual Savings Accounts

The Cash ISA is a financial product available to UK residents. The amount deposited is tax-free and the money is used for stocks and shares. The government believes that this type of savings account can help middle-class people boost their spare money.

• National Savings and Investments

This form of savings account is backed by the government. Your money can be totally secure through this type of investment. All financial products under this account are completely tax-free. The NS&I offers monthly income products, premium bonds, products with guaranteed returns, children's savings product, amongst others.

• Credit Unions

Credit unions are mutual financial associations which are managed by their members. The members in a credit union usually save or invest money to the organisation. The union will allow you to borrow money depending on your records. The members of this credit union usually have a common bond. This means that they live in close proximity to each other or they work in the same establishment.

Types of Investment Products

• Shares

Shares is buying a stake in a certain company. If the company will do well, you can expect your "share" to rise. You may be able to sell your share and profit from it. If you do not wish to sell your share, you can gain profit through the dividends or income payments. But if the company does not do well, your shares could fall and could result to no value at all.

• Collective or Pooled Investments

There are several types of this kind of investment. Generally, these are small contributions generated from a number of people to make up a single investment fund. A pooled investment can either be one of the following: investment trusts, ISAs, unit linked life insurance, exchange trade funds, open ended investment companies, and authorised trust units.

• Bonds

Bonds are loans to the government, local authority, or a company. They hold a fixed amount of interest and are invested on the stock market. As a result, the value of the bonds can either rise or fall.