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How should I be saving money in my 20s? What is the best option to make my money go further?

12 March 2021

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Question by Nell

How should I be saving money in my 20s? What is the best option to make my money go further: savings accounts, plum investments, stocks and shares ISA?


Answered by Gregory Deer

t’s great to hear you have started a savings habit in your 20s, and are looking to know more about your options.

When choosing where is the best place to save, it is important to be clear about your objectives for the money you are saving. With money, our objectives are usually based on:



      How much do I need?
      When am I going to need it?


Sometimes in your 20s it is difficult to know the exact answers to these questions, but I would challenge you to try and get clarity on these before allocating your savings.

The best option to make your money go further will be based on the second question, when will you need the money.

If the savings are to be used within 5 years to meet a goal, such as a holiday, buying a car, wedding expenses, I would suggest you allocate the money to cash savings. More information on how to get the best rates for you, including fixed terms and notice accounts, can be found on the Money Saving Expert website, or you may wish to look at National Savings and Investments options. Although your money is unlikely to keep pace with inflation, you should be comforted that when you need the money, the value will not have gone down.

However, if it is money you will not need within 5 years, you could use investments to meet longer term objectives. These could include buying a home, or saving for retirement. The evidence shows holding a diversified portfolio with shares of companies from around the world (global equities) is more likely to retain and grow the purchasing power of your money over the long term, than holding cash. It’s important not to worry about the daily ups and downs, and to focus on holding investment for long time periods. A Stocks and Shares ISA is a tax wrapper in which you can hold investments. Investments in an ISA can grow tax free and you can access savings at any time.

I am not familiar with ‘Plum investments’, but I understand they offer both cash and investment options for savers. If you choose to invest in a Stocks and Shares ISA, you can compare stocks and shares ISAs using the Boring Money ISA Compare tool and choose the most appropriate option for you. It may be Plum Investments are suitable, but there are larger, well known providers which you may decide provide a better starting point.

Answered by

Gregory Deer

Senior Financial Planner

I help people align their time and money to their values. I believe financial planning and a further understanding of money can enhance everybody’s life, not only by maximising monetary wealth but also through improved personal wellbeing. My goal is to positively impact as many lives as possible.