Human nature drives comparison, and rarely more so than when it comes to our finances.
When we’re choosing a savings or investment product, we naturally look for a simple headline to help us decide:
“This one pays 5%”
“That one is instant access”
“This one has no fees”
The problem is that financial products are rarely that simple. Many are marketed around a single feature – often an interest rate or projected return – but that headline alone rarely tells the full story.
To make a meaningful comparison, you need to step back and look at the bigger picture. Here are some of the factors worth considering.
The key factors to compare
Risk
Risk is often reduced to a single idea: “Could I lose my money?” That’s part of it – but not the whole story.
Some products expose your money to market movements, which means values can go up and down. In some cases, you could, indeed, get back less than you invested. Others (like our fund) limit market risk by spreading investments across a mix of different assets, like property, cash and government bonds, but introduce different trade-offs, such as slower, but potentially higher long-term growth.
Alongside the risk of loss of capital, there’s also inflation risk – the risk that your money loses purchasing power over time if returns don’t keep pace with rising prices.
You might even deem not being able to take your money out immediately a risk. We’ll explore that in more detail later.
Ultimately, risk isn’t the same for everyone, and it changes depending on your goals, time horizon and personal circumstances. Understanding what type of risk you’re taking – and why – is more important than avoiding risk altogether.
Return
Not all returns are created equal.
It’s important to understand the difference between:
- Guaranteed returns – fixed outcomes you’ll receive if you meet the terms
- Expected returns – what’s anticipated over time, but not promised
- Illustrative returns – examples showing what could happen, not what will
Tax treatment also matters. For example, ISAs, like ours, allow your returns to grow free from UK income and capital gains tax, which can make a significant difference over time. Always look for whether quoted returns are gross or net of basic rate tax.
Free Event
If you’d like to learn more about how to maximise your tax-free savings, join our dedicated webinar. We will show you how to make the most of your tax-free allowance by saving regularly into our ISA, and how much you could shelter from the taxman every year.
Fees and charges
Fees can be easy to overlook – especially when performance figures are quoted before charges.
Things to watch for in particular are exit fees and commissions payable to third-party introducers. For interest, we neither charge or pay either.
Two products may appear to deliver similar performance, but the one with lower or clearer charges could leave you better off in the long run. What matters most is your outcome after fees, not the headline number before them.
Term
Some products are built for short-term needs, others for medium or long-term goals.
Ask yourself:
- How long is my money tied up for?
- What happens if I need to access it early?
- Are there penalties or loss of benefits?
A product that works well for a five or ten-year goal may be unsuitable for money you need sooner. All our savings and investment products are designed to deliver their best returns over five years or more. If you are looking for a fixed-term investment, our 10 Year Savings Plan could be ideal, but if you need more flexible access, then one of our ISAs could be more suitable.
Access
Access isn’t just about whether you can get to your money – it’s about how and when.
Consider:
- Notice periods
- Penalties for early withdrawal
- Whether access depends on market conditions
There’s often a trade-off here. Products offering higher long-term growth potential may limit short-term access, while instant-access products may offer a lower interest rate or sacrifice growth. In any circumstances, it is important to retain an emergency pot that you can access immediately.
Provider strength and protection
Knowing who is looking after your money – and what protections are in place really matters.
Brand reputation, FCA regulation, track record and financial strength can all give useful signals about how well your potential provider meets its responsibilities.
Alongside this sits the Financial Services Compensation Scheme (FSCS), which is often misunderstood. FSCS cover applies if a provider fails. This includes protection for deposits up to £120,000, or 100% protection in the case of long-term insurance products like ours. It does not protect you against investment performance or market movements.
Understanding whether your provider is owned by shareholders or structured as a mutual, like we are, can also be worth it. All our profits are distributed or reinvested for the benefit of members rather than paid out to external investors.
Provider accessibility
One final, but important thought:
In a digital age, it can often be difficult to talk to a real person, whatever the service might be.
Some people are happy managing everything digitally. Others value being able to speak to a real person, ideally based in the UK, and especially when making long-term financial decisions.
Knowing what support is available, where and when, can make a real difference to confidence and peace of mind.
The bottom line
Hopefully, you will get from this that no single factor tells the whole story.
A strong headline rate, a guarantee, or a well-known provider can all be part of the picture – but none should be looked at in isolation.
To protect yourself from a wrong decision, take your time. Ask more questions. Make sure you understand not just what a product offers, but how it fits with your goals, time horizon and comfort with risk.
If you’d like help navigating the options, our friendly UK-based team is here to explain – clearly and simply – where Metfriendly & Police Friendly products might fit. We can’t give financial advice, but we can give helpful context to make complex choices easier to understand.
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