00:00I've worked hard for this money.
00:01Let me put it somewhere no one can find it.
00:05Now, young Gabriel, you could put the money down the side of the couch,
00:09but it probably won't be worth the same amount in 20 years.
00:12Wait, so this money that I've stuck away isn't going to be worth the same in the future?
00:15Mm-hmm.
00:16Because of inflation.
00:17Okay, how do I get around that?
00:20Well, you might want to consider either savings or investments.
00:24One sec, let me just get out my notepad.
00:27But first, let me break down the difference.
00:30Savings is money set aside safely for the short term,
00:32whereas investments is money put into assets for long-term growth.
00:36Now, with any investments, there is risk.
00:39But without smart risk, there's also no rewards.
00:42That's why savings is lower risk, but also lower returns.
00:46Whereas with investments, there is a higher risk involved,
00:49but potentially much higher returns.
00:51But I've only ever been told about savings.
00:54Savings are still brilliant products for shorter-term goals.
00:57Think things like emergency funds, holidays, or saving for a house in a few years.
01:01Whereas investment is for longer-term goals.
01:04Think retirement, your children's future education, or things you can't even imagine just yet.
01:09This is for the money you don't want to touch for at least 10 years.
01:12All right, but how did you learn all of this?
01:15Well, I've learned it all by looking at history.
01:16And now even though historic returns don't guarantee what's going to happen in the future,
01:20investing has constantly shown over long periods of time that it's one of the best ways to outpace inflation.
01:27Even normal saving accounts and interest rates don't necessarily outpace it over long periods of time.
01:32So is this how you save for your Hovermobile and Teleporter?
01:35Yeah, sure.
01:37But before you do get started, there is a bit of a process you want to make sure you've followed.
01:42First, pay off all your high-interest debt.
01:45Second, build that emergency fund, three to six months worth of savings.
01:50Third, you can now consider some shorter-term goals with specific and set measurables.
01:55Mm-hmm.
01:55And fourth, you can look at investing for those longer-term goals.
01:59Okay.
02:00And remember, it's not an either-or decision.
02:02It's a sequence that allows you to build towards your financial future.
02:06Wish I'd started investing sooner.
02:08But the thing is, you probably are already doing some investing inside of your pension scheme.
02:14And just to add to my point, if you stuck away £200 a month for the next 30 years,
02:18after inflation, here's how much you'd have if you kept it in cash.
02:22This is how much it would be if you got an average 3% interest rate from the bank.
02:26And this is what you'd get if you got the average 8% returns of the stock market.
02:31And by the way, if you're looking for a great place to save or invest,
02:34you should check out a cash ISA or a stocks and shares ISA with Trading212.
02:38You have changed my life, old Gabriel.
02:40I guess I'll see you in 50 years.
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