See below for the full answer, but as a brief overview:
Savings accounts:
Your money is stored with a bank as cash
The bank may pay you interest
Depending on the account, it shouldn’t take more than a day or so to deposit or withdraw your money
They are suitable for safety net funds as they are covered by the Financial Services Compensation Scheme (FSCS)
They are typically free to access, but accounts with higher interest rates may require a large minimum deposit, and you may be required to lock away your money for a set period of time
Investment funds:
You can access investment funds through our ‘platform’
Your money is invested by a fund manager into a wide variety of assets
Investment funds typically offer higher returns over the long term than savings accounts
Investment funds offer the potential of returns ahead of inflation
Your money is at risk and you may get back less than you originally invested
You buy and sell ‘units’ of the fund, instead of depositing/withdrawing cash
It takes longer to move money in and out (up to a week or even longer)
They are not suitable for safety-net funds, or money you need for essential spending
They are a place to grow for long-term savings (think money you’re happy to leave in for 5+ years)
Investment management and platform fees may apply
FSCS covers investments too, but the limits differ and you are not covered against poor performance
Investment funds with Chip
The investment funds we offer are provided by fund managers. Here are some of them: Vanguard, BlackRock and L&G, and you can buy units of these funds.
A fund manager invests your money across multiple different assets, like stocks and shares, or government or corporate bonds, with the aim of earning returns.
This means when your money is in an investment fund, your capital (money) is at risk, and there is always a chance you may get less money out than you put in. There are a number of measures investment fund managers take to mitigate this risk, but it is a risk of investing.
*When investing, your capital is at risk. The value of your investments can go down as well as up, and you may get back less than your original investment.
Need further help?
If you have any further questions, please get in touch with our support team using the in-app chat. This can be found in the Contact Us section on the Profile tab.