While both saving and investing involve putting aside money, they are different practices. 

Saving refers to putting money aside for a target or goal, or simply as a rainy day fund. It’s generally instantly (or easily) accessible, and will more than likely be in a bank account or other system with little to no return.

On the other hand, investing is the process of taking that money and putting it in an account where it is used to purchase stocks and funds, with the hope that the value of the fund will grow other time. 

The benefit of saving is that the money is safe and accessible, but the downside is that over time the value of that money may be eaten away by inflation. 

The benefit of investing is that your money may grow at a far higher rate of return, but the downside is that the money is at risk of losing value. 

Both saving and investing are parts of a sensible financial strategy for many people.

When you invest, there is the risk that your investment may go down as well as up and you may lose some or all of your money. 

However, if you invest regularly and for a long period of time, this risk is mitigated. Generally, the longer period for which you invest in a low to medium risk fund, the more likely you are to see returns. 

Advisors recommend investing for a minimum of five years for this reason.

It isn’t possible to predict this exactly. Funds with a higher risk rating can deliver potentially higher returns, but the caveat is that these funds are also more volatile, and therefore more likely to experience downturns. 

Lower risk funds generally deliver lower returns on average, but your investment is safer in these funds than it would be in a higher risk plan.

Speaking to an advisor will help you determine the level of risk you are comfortable with in order to invest, and this in turn will determine the returns you may see on your investment.

In general, the longer you invest, the better - which means that waiting for a better time is an opportunity cost.

Investing regularly over a long period is the best way to mitigate the risk of investing and reap the potential rewards.

As the old saying goes: “time in the market beats timing the market.”

In Ireland, investments are subject to a 1% government levy. This once-off payment is deducted when you make your investment.

You must pay Exit Tax of 41% on any growth on your investment, with payment due on withdrawal or every eighth anniversary of your investment. This will be automatically deducted and paid to Revenue on your behalf by Irish Life.

A financial advisor will be able to speak in more detail as to the levies, taxes, and fees and charges applicable to your investment.