How are investment funds different from savings accounts?

A brief overview:

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‍Savings accounts:

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• 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

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‍Investment funds:

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• 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

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Investment funds with Chip‍

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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.

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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.

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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.‍

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*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. ‍

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Need further help?

If you have any further questions, 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) or by email at hello@getchip.uk for further help.