Every month, the Office for National Statistics (ONS) releases the latest figures on the UK labour market from its Labour Force Survey (LFS). While this data is obviously important news for job seekers and politicians, it is also one of the most closely watched days in the calendar for investors. 

The Unemployment Rate represents the percentage of the labour force that is without a job but is actively seeking work. It’s important to note that this figure doesn’t include everyone who isn’t working. Students, retirees, and those not looking for a job are classified as ‘economically inactive’. 

When investors are interpreting unemployment figures, they’re typically looking for three things:

1. The headline rate: Is this figure going up and down? 
2. Wage growth: Are pay packets getting bigger?
3. Vacancies: Are companies trying to hire?

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Why do investors care?

For investors, employment data is a key economic health indicator and can be a key catalyst for other key indicators. It can have a direct effect on interest rates, consumer spending and inflation. 

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The link to interest rates

This is the biggest reason the markets care about jobs data. Unemployment is a key data point for the Bank of England Monetary Policy Committee when determining their base rate of interest, which determines the cost of borrowing for other banks. 

If unemployment is low: businesses are in greater competition over staff, pushing wages higher. When wages increase, so does consumer spending, and inflation can follow suit. The Bank of England may raise interest rates to stop the economy from ‘overheating’. Higher rates are tougher on borrowers, and cause markets to dip as debt becomes more expensive. 

If unemployment rises: this suggests a potential slow down in the economy, and the Bank of England may cut interest rates to try and stimulate growth. Lower rates are often welcomed by markets and investors, as they make borrowing cheaper and encourage spending.

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The link to corporate profits

The UK economy is heavily driven by consumer spending, and this has strong links to employment.

When jobs are safe (low unemployment): People buy cars, book holidays and subscribe to services. This pushes profits up for consumer goods and services companies like airlines, high-street shops and restaurants.

When jobs are at risk (high unemployment): Consumers tighten their fists and generally stick more to essential spending. In this environment, consumer essentials suppliers like supermarkets and utilities tend to show more resilience, whilst higher end discretionary spending like luxury goods and leisure suffer.    

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The ‘good news is bad news’ conundrum

Drawing a clear link between job growth and a robust economy can be tricky, and the stock market's reaction to positive employment data is not always consistent. 

This often happens due to inflation fears. If the job market is doing ‘too well’, investors’ inflation fears deepen, and predictions of Bank of England rate increases can dampen market spirits. Markets prefer a stable number that shows a strong economy, without being so strong inflation fears creep in. 

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Read our full guide on economic indicators investors should watch out for.

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When can I retire?

You can technically retire at any age you choose, provided you have sufficient personal savings to fund your lifestyle. However, if you are relying on pension income, your retirement age is dictated by two government controlled access points:

• Private pension age (currently 55): The age at which you can access your own pensions.‍
• State Pension age (currently 66): The age the government starts paying your State Pension if you qualify. Please note: This is currently rising and will reach 67 by 2028. This change affects anyone born on or after 6 April 1960.

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The normal minimum UK pension age 

The Normal Minimum Pension Age (NMPA) is the earliest age at which you can legally access your private or workplace pension savings without incurring a heavy tax penalty.

• Until 5 April 2028: The NMPA is 55. (Access at 55 is only guaranteed if you reach that age and crystallise your funds before 6 April 2028).

• From 6 April 2028, the NMPA will rise to age 57.

How the age increase affects you

The move from age 55 to 57 will affect you if you were born after 5 April 1973. If you fall into this group and are planning to start taking money at 55 or 56, you will need to adjust your plans, as you will generally not be able to access these funds until you reach age 57.

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What is a protected pension age?

A protected pension age is a ‘protected right’ attached to certain older pension policies that allows you to access your savings earlier than the Normal Minimum Pension Age (NMPA).

If you joined a specific pension scheme before 6 April 2006 that granted an ‘unqualified right’ to take benefits at an age lower than the current NMPA (such as age 50 or 55), you may be able to keep this right even after the 2028 age increase.

Important Considerations

This is a complex area of pension law and rules vary significantly between providers. Because your eligibility depends on the specific wording in your original policy deed, we recommend seeking professional financial advice. A qualified adviser can review your documents to:

• Confirm if your protected age remains valid.
• Ensure you do not accidentally lose this protection, for example, by transferring your pension to a different provider.

Because the rules depend on the specific wording in your policy deed, it’s recommended to seek financial advice from a professional. Qualified financial advisers can review your documents to confirm if your protection is valid and ensure you don’t accidentally lose it by transferring the pot.

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Can I withdraw my pension early? 

You can usually only withdraw your pension before the minimum age if you are suffering from serious ill health or have a terminal diagnosis. 

• If you are physically or mentally unable to do your job (and in some cases, unable to do any job), you may be allowed to retire early and take your pension.
• If you are diagnosed with less than one year to live, you can often take your entire pension pot as a tax-free lump sum if you are under 75.‍
• If you withdraw money early for any other reason (e.g. just because you need the cash), it is classified as an ‘unauthorised payment’. The tax penalty is severe and HMRC will charge you up to 55% of the withdrawal amount.

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Do I have to retire to take my pension?

You do not have to stop working to start drawing money from your private or workplace pension. This process is often called ‘flexible’ or ‘phased’ retirement. You can:

• Continue full time work and take some pension cash for a specific purchase (like paying off a mortgage).
• Keep working part-time and use your pension to top up your lower salary.
• Stop working entirely and live solely on your pension.

It’s worth noting that if you take taxable income from your pension while still working, your annual allowance (the amount you can save into a pension tax-efficiently) may drop from £60,000 to £10,000. This is known as the Money Purchase Annual Allowance (MPAA).

The tax-free lump sum

For many, an attractive feature of a pension is the ability to take a large chunk of cash completely tax-free. This is known as the ‘tax-free lump sum’, and understanding the rules around it and how it’s taxed is important for avoiding an unexpected bill. Learn more about the tax-free lump sum.

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January is where all those “I’ll sort it next year” moments and prior good intentions are suddenly in the present.

That’s why this month at Chip we’re focusing on simple ways to get control of our money and feel a bit more organised.

Last week, we looked at savings challenges, with fun, motivating ways to build better habits.

This week, we’re tackling the real-life money situations people find themselves in right now. If any of them sound familiar, you’re not alone – and there’s an easy next step.

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1. “I haven’t used any of my ISA allowance”‍

Your ISA allowance resets in April and if it's been quietly sitting there unused, January is a good time to revisit it.

ISAs let your money grow tax-free¹, which makes it one of the most valuable tools for long-term saving – yet many people don’t take advantage of them.

Your ISA allowance doesn’t roll over either, so it’s important to use it before you lose it after 5 April.

¹Chip does not provide tax advice. Tax treatment depends on individual circumstances and may be subject to change in the future.

How Chip can help:

The Chip Cash ISA gives you a tax-efficient place to hold your savings, while still keeping access when you need it.

You can deposit up to £20,000 per tax year, earn interest tax-free, and stay flexible if plans change. It’s a simple way to make sure more of your money stays yours as your wealth grows.

Pleae note that the Chip Cash ISA is now closed to new customers.

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2. “My money is just sitting in my current account”

This is one that many of us are guilty of. In fact, it’s estimated that £526 billion is currently sitting idle in current accounts.

We get it, our salary is paid in, and it can be easy to just leave it there. But If your spare cash sits in your current account earning 0%, it’s likely losing value to inflation when it could be earning interest.

Current accounts are great for day-to-day spending, but not so great for holding onto money you’re not actively using.

How Chip can help:

The Chip Instant Access account lets your money start earning interest straight away, with unlimited withdrawals that arrive in seconds, whenever you need it.

It’s ideal for cash you want to spend in the short-term; so you can use it to top your current account as you go, while you pocket that extra interest.

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3. “I’ve got something coming up this year I’m saving for”

A holiday. A wedding. A house move. For a big life moment, January is often when those plans start to feel real – and so does the need to save for them.

But it’s not just about saving. The hard part can be staying on track. This is where ‘unlimited access’ isn’t actually that helpful, and some guard rails can come in handy.

How Chip can help:

The Easy Access Saver is designed for short-to-medium-term goals. With up to three penalty‑free withdrawals a year, it gives you structure without locking your money away; helping you stay focused on what you’re saving for.

It’s a gentle nudge towards consistency, and a simple way to avoid temptation and impulse purchases.

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Making it easy to get started:

Whichever situation you’re in, getting your money organised doesn’t need to be complicated. With all Chip savings accounts, you can:

Deposit in just a few taps using seamless Open Banking technology.‍

Move money instantly between accounts to suit your needs.‍

Set up automatic recurring deposits, so saving happens before you even think about it.

Less effort, less account admin, just more progress towards your goals. Use Chip to give your money a setup that works for the year ahead, so you can focus on your other resolutions this year.

What are interest rates?

Interest rates are basically the price of borrowing money, or the reward you get for saving it. In the UK, the Bank of England sets something called the base rate, which influences how much banks charge on loans or pay on savings.

For example, if the base rate is 5%, your bank might offer a mortgage at 6% or a savings account at 4%. When rates go up, borrowing gets more expensive, but saving becomes more rewarding.

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Why do central banks change the interest rate?

Central banks, such as the Bank of England (UK), Federal Reserve (US) and European Central Bank (EU), adjust interest rates to keep inflation under control. They do this to try and maintain economic stability. 

• If inflation is rising too fast, rates are increased to cool spending.
• If the economy is slowing, rates are lowered to encourage borrowing and investment.

The goal is to strike a balance by encouraging growth without letting inflation get out of hand.

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How is the interest rate set?

In the UK, the Monetary Policy Committee (MPC) of the Bank of England meets around eight times a year to review economic conditions and vote on the base rate. They consider:

• Inflation (measured by CPI)
• Employment data
• Economic growth (GDP)
• Global market conditions

The rate they set affects everything from mortgage repayments to business investment decisions. 

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What happens to markets when interest rates rise?

Higher interest rates usually have a cooling effect on the stock market. This can include:

• Increased cost of borrowing, which can reduce company profits and consumer spending.
• Growth stocks, especially in tech or early-stage companies, often fall as future earnings are discounted more heavily. Understand growth investing. 
• Bond prices typically drop as new bonds offer better yields, making older ones less attractive.

Some sectors, like banks through savings accounts and products, may benefit, but overall, rising rates can signal tighter financial conditions. 

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What happens to markets when interest rates fall?

Falling interest rates usually encourage investment and spending. This can include:

• Companies can borrow more cheaply to grow operations.
• Consumers may spend more as loans and mortgages become affordable.
• Stocks often rise, especially in growth-focused industries.

Lower rates tend to push investors to seek better returns in the stock market as savings accounts offer low interest rates. 

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How can investors adapt to interest rate changes?

Adapting to interest rate shifts is key to managing risk and opportunity when it comes to investing. Some steps investors can typically take are:

• Diversify across various asset classes to reduce sensitivity to rate movements.
• Research and consider dividend-paying stocks or defensive sectors (sectors that typically provide essential goods and services that consumers will continue to purchase regardless of the economic climate) during periods of high rates.
• When rates fall, growth stocks and longer-duration bonds may offer better returns.
• Review your investment time horizon: short-term savers may prefer fixed-income products, whilst long-term investors could ride out market cycles and potential, although overall investing is for the medium to long term (5 - 10 years+). 

Being aware of how monetary policy affects asset prices can help investors stay aligned with their goals. 

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Interest rates and investing impact summary

Interest rates are a powerful economic lever that directly and indirectly shape the investment landscape.

For new investors, understanding their effects is a crucial building block for making smart, informed decisions. Learn about investing basics here. 

Next up: learn how stock markets tend to behave during a recession, and what that means for investors. 

How does a Savings Account Work?

‍Banks tend to offer a range of savings accounts with various interest rates. When you deposit money into a savings account, the bank will usually pay a small amount of interest on that money, which means that your balance will grow over time.

You can usually withdraw money from a savings account at any time unless it’s an account which requires you to send a notice to withdraw funds.

In general, savings accounts are a safe and easy way to help save money and earn interest on that money too. Learn some money saving tips.

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What Types of Savings Accounts are available in the UK?

‍There are a variety of savings accounts available in the UK. Some of the more common accounts are:

1. Easy Access Savings Account: This type of savings account allows you to deposit and withdraw money at any time, typically with no notice period or penalty for withdrawals. They usually have no minimum deposit requirements. Learn more.
2. Notice Savings Accounts: These accounts require you to give notice before making a withdrawal, usually 30, 90 or 120 days. Notice accounts tend to have a higher interest rate than easy access accounts.
3. ISA (Individual Savings Account): ISAs are tax-free savings or investment accounts that allow you to save money without paying tax on the interest earned. There are different types of ISAs, such as cash ISA or stocks and shares ISA.

Chip does not provide tax advice. Tax treatment depends on individual circumstances and may be subject to change in the future.

It’s always important to do your own research into the various savings accounts available and find one that best fits your needs.

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Opening up a Savings Account

‍It’s typically very simple to open up a savings account. However, you should make sure you do your research to ensure you open a savings account that’s right for you. Some tips for finding the right savings account include:

1. Interest Rate: Look for savings accounts that have a high AER (annual equivalent rate). The higher the AER, the more interest you can earn through deposits and the account balance. Learn more about interest rates.
2. Fees: Some savings accounts may come with fees, which could be for monthly maintenance or fees for withdrawing. Make sure you check the terms and conditions to ensure you don’t have to pay unexpected fees.
3. Accessibility: You should consider whether your cash can be instantly accessed or you need to give notice to withdraw funds. As a general rule you shouldn’t put savings you may need to access instantly in notice or fixed term savings accounts.
4. Minimum Deposit Requirement: Some savings accounts require a minimum deposit to open the account, while others don’t. Choose an account that best fits your financial situation.

It’s a good idea to shop around and compare the different savings accounts available, to find the one that best fits your needs.

A bull market is a period when a broad market index, like the S&P 500, rises by 20% or more from its recent lows. This upward trend is fuelled by widespread investor confidence and optimism, which drives a sustained period of increasing prices.

During a bull market, investors use various strategies to try and profit from the rising values. A bull market is the direct opposite to a bear market, which is a market drop of 20% or more. 

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When are we in a bull market?

Similar to bear markets, bull markets can only be identified retrospectively, once a major index has risen 20% or more from a recent low. 

Certain economic signals and market conditions can create the environment for a bull market:

• Strong economic growth: When the economy is expanding, it's a powerful driver for the stock market. Key signs include low unemployment, rising GDP, and healthy wage growth, which all contribute to higher consumer spending.
• Rising corporate profits: A bull market is built on the success of businesses. When companies consistently report strong earnings and positive future outlooks, it boosts investor confidence and drives their stock prices higher. 
• High investor confidence: When investors feel positive about the future of the economy and corporate earnings, they are more willing to buy stocks, creating upward momentum.
• Supportive monetary policy: When central banks, like the Bank of England, keep interest rates low or stable, it makes it cheaper for companies to borrow and invest. This stimulates the economy and often makes stocks a more attractive investment compared to lower-yielding bonds or savings accounts.

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How long do bull markets last?

Although no two bull markets are the same, historical data shows bull periods far outlast bear periods on average. For example, the average duration of the seven bull markets between 1969 and 2024 was six years and nine months. In contrast, the average duration of the six bear markets in the same period, was one year and three months.¹

The contrast in this data is central to the principle that over time, markets have trended upwards, more than they have downwards. The crucial takeaway is that staying invested is important for maximising potential returns, as even if you miss the bad days, you could also be missing out on great runs too. 

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What does bullish mean?

A bullish investor expects an upward trajectory in prices (the direct opposite of being bearish). Confidence is typically based on positive signs such as:

• Strong company earnings reports.
• Positive economic news e.g. declining unemployment.
• Innovative new products or services.
• Favourable industry trends.

A bull’s primary goal is to profit from these rising prices. The most common strategy is simply buying an asset and holding it, also known as ‘going long’. This principle can be applied by any investor hoping to generate returns in the market.

More active investors might take more risk:

• Buying call options: essentially reserving the right to buy a stock at a set price, which becomes profitable if prices rise beyond the call level. 
• Growth stocks: speculating on companies in high-growth sectors, which have historically yielded greater returns than the rest of the market. 

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How to approach a bull market?

It’s important to approach bull markets with the same disciplined approach you’d apply to any investing scenario. The ultimate goal is to not miss out on the upward trend, whilst not being driven by emotion which can lead to mistakes. For example:

• Staying invested but avoiding FOMO: it can be tempting to chase ‘hot stocks’ in high-growth areas in order to pursue the biggest gains, but it’s important to balance opportunity with your risk level. Don’t jump in with more money than you’re comfortable investing, and stick to your long-term plan. 
• Review and rebalance: bull runs can cause your portfolio to drift from its set targets. Better performing assets will grow to become a larger percentage of your holdings, causing an unintentional shift in risk. Consider rebalancing to your original allocations, by moving assets from overperforming to underperforming assets to lock in some gains and stay diversified.
• Regular investing: by sticking to your usual regular investment plan, you won’t get drawn into trying to time the market. A steady approach ensures you're exposed to differing purchase prices, rather than going all in at a potential market high.

Bull markets don’t last forever. Whilst they can present solid opportunities for gains, and staying invested is important, it’s equally important to not get carried away and invest more than you’re comfortable with. Stick to your investing plan and avoid getting too caught up in the latest trend, as you may become overweight in a particular theme or market, without even realising. 

Read our full guide of economic indicators investors should consider.

ISAs are the most popular savings product in the UK, but they aren’t always the easiest to understand if you aren’t familiar with the ins and outs.

Some Cash ISAs are flexible. That means if you take money out, you can put it back in again within the same tax year, without using up any of your annual £20,000 ISA allowance.

But your ‘replaceable ISA allowance’ goes beyond that. ‍

‍This is the extra "capacity" created when you withdraw money from a previous tax year. Instead of losing that tax-free space forever, you get a temporary window to put that exact amount back in without it counting as a new contribution.

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The previous tax year rules

If you have a large balance built up over several years, a Flexible ISA allows you to treat that "old" money with the same freedom as your current £20,000 allowance.

You can withdraw "old" money: Let’s say you have £50,000 from previous years, you can withdraw any amount of it, e.g. £30,000, and your "replaceable allowance" for the year effectively becomes £50,000 (£20,000 current limit + £30,000 old money).

‍The "same account" restriction: While you can pay current year replacements into different ISAs, you must pay previous year replacements back into the exact same account they were taken from.

‍The "use it or lose it" deadline: Regardless of how old the money was, the "flexible window" always slams shut on 5 April. If you withdraw £30,000 of old money in August 2025, you have until midnight on 5 April 2026 to replace it. If you miss that date, that £30,000 of "tax-free capacity" is gone forever.

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How the flexible money goes back in (the order)

HMRC has a "filling up" order for when you pay money back into a flexible ISA so you always know how its affecting you

1. Replenish previous years first: Your deposits first "fill back up" any money you took out from previous years.
   
2. Replenish current year next: Once old money is replaced, your deposits then cover any current-year withdrawals.
   
3. New subscriptions last: Only after all withdrawals are replaced do your deposits start counting toward your fresh £20,000 annual limit.

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Why it can supercharge your tax-free savings

A replaceable ISA allowance gives you flexibility that many people don't realise they have.

In practice, this means you can pay in more than £20,000 in a single year, as long as part of that amount is replacing money you previously took out.

That flexibility makes your ISA a more adaptable tool for real life. You can use it for short-term needs, like a house deposit, home improvements, or a major life event, and still keep your long-term plans intact.

It can also be particularly useful if you have already used your £20,000 allowance for new money elsewhere and did not realise (or forgot) you still had the option to replace earlier withdrawals.

The key is knowing the allowance is there, and making use of it within the same tax year if it fits your situation.

Jasaun Knight remembers the first time he operated a PC using only his brain.“The experience of controlling a computer with my thoughts, moving a cursor around the screen and playing games, was mind-blowing,” said the 35-year-old American. “It was like telekinesis.

I felt I had a superpower.”Knight is one of fewer than 200 people worldwide who have been implanted with a brain-computer interface (BCI) — a device that detects neural activity and translates it into digital commands.

BCIs have the potential to restore speech and movement to people who have lost them through injury or disease. If the technology becomes safe and affordable, it could turn computers and artificial limbs into more direct extensions of the human body, reshaping the relationship between people and machines.

Companies developing BCIs have already raised more than $1bn in 2026, according to PitchBook data, compared with $1.56bn in the previous four years combined.

Neuralink, founded by Elon Musk a decade ago, is the best-funded, having raised more than $1.3bn in seven rounds. But dozens of competitors are pulling in substantial investments as they pursue a range of approaches to connecting computers to the nervous system.

“The field is advancing rapidly as investors move into neurotechnology, though it has already been well characterised and validated in academia,” said Michael Mager, chief executive of New York start-up Precision Neuroscience, which made Knight’s implant. “We in industry are now taking this transformative technology and making it into products that will have a broad impact.”

The most ambitious companies are developing “invasive” devices inserted through a surgical incision in the skull. Some, like Neuralink, have electrodes that penetrate the brain and are designed for long-term use. Others, including Precision Neuroscience, are developing thin, flexible BCIs that sit on the surface of the brain without piercing it.

Knight received his device during surgery for brain cancer as part of a clinical trial that lasted a few days.

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“I didn’t feel anything physically in my head,” he said. “Once you get the hang of it, your thoughts control what’s happening on the computer screen with no effort at all. ”Another area of research involves non-invasive systems placed on the scalp, which avoid the need for surgery altogether.

However, although they can be useful for diagnosis and research, the brain signals they receive are weakened by passing through the skull, and the devices are not yet sensitive enough to convert thoughts into dependable computer instructions. “All the hype and the funding is going into implantable BCIs,” said Damien Coyle, director of Bath University’s Institute for the Augmented Human.

“With non-invasive techniques the spatial resolution of signals is not so good, but they have a lot of scope for development over the next few years, for example to modulate brain activity. ”US companies including Synchron, Blackrock Neurotech, Axoft and Merge Labs benefit from deep American venture capital markets and a Food and Drug Administration that executives regard as more responsive than regulators in Europe.
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But a cluster of innovative BCI companies is emerging in Europe, among them CorTec in Germany, Onward Medical in the Netherlands, Spain’s InBrain, and Neurosoft and Ability Neurotech in Switzerland.

“The advantages of a European location lie in our deep engineering and precision manufacturing heritage as well as our talent in neuroscience,” said Frank Desiere, CorTec chief executive.

However, he added that Europe “has a real gap in late-stage funding and scale-up capital, as well as a fragmented reimbursement landscape”, and that the continent lacked a regulator “guiding and consulting manufacturers like in the US”.

The company has chosen US sites — the University of Washington and Mayo Clinic — for the first clinical trials of its BCIs.

Meanwhile, the industry is also growing rapidly in China following Beijing’s designation of BCIs last year as a nationally strategic sector, with a roadmap to create two to three “world-class” companies by 2030.

Several provinces have launched investment funds and industrial zones, backed start-ups and supported hospitals running clinical trials.

Private investors have followed suit. In the first half of 2026, VCs poured Rmb7bn ($1bn) into the broader neurotech sector across 60 investments, according to ITJuzi data.

Roughly a dozen Chinese companies are working on invasive BCI devices, according to a tally by the FT, with a much larger number developing non-invasive applications.

One leader in the field is NeuroXess, founded in Shanghai in 2021, which is developing flexible implants to treat severe neurological disorders.

Analysts say China has a strong advantage with its large patient population for clinical trials and regulatory support for accelerating the technology’s development.

Most BCIs work in one direction, reading signals from the brain and turning them into electronic commands. But some companies are developing systems that can also send signals back, creating a two-way exchange between brain and machine known as closed-loop stimulation.

CorTec is among them. “It’s like having a dialogue with the brain, adapting our therapy to the individual signals of the patient,” said Desiere. “In strokes we target the motor cortex, reading and stimulating the cells there so that they fire together. Neurons that fire together wire together.

”One of neurotech’s biggest opportunities may come when BCIs converge with another rapidly advancing field: prosthetics. Artificial limbs have been around since ancient times but developments in sensors, materials, batteries, motors and software are making them lighter, more capable and easier to control.

Bristol-based Open Bionics makes arms fitted with sensors that detect movement in a user’s remaining muscles and transmit the signals to the prosthetic hand.
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While the investment climate has fluctuated during the company’s 12-year existence, its revenues have grown at a compound annual rate of 60 per cent since 2018.Yet even the most advanced artificial hands lack much of the dexterity and sensation of the biological original.

The technical capability to build a hand that replicates many natural movements already exists, according to Joel Gibbard, Open Bionics co-founder and chief executive. But the systems used to control them remain “very, very rudimentary” — a problem BCIs have the potential to resolve.

Researchers hope a direct link to the brain could eventually provide the missing interface — and, if signals flowed both ways, restore a sense of touch.Meanwhile, Open Bionics is embracing the superhero associations of its technology.

Its Hero Arm offers children designs based on characters from franchises including Black Panther and Metal Gear through licensing agreements with companies including Disney.“There are technical limitations for today, but what people think about for the future is inspired by movies and science fiction,” said Gibbard.

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Back in New York, Knight, a former insurance agent who is now training as a software engineer, is considering a new career in neurotech — helping to develop the kind of systems he helped test.“After my experience,” he said, “I’d probably be a perfect candidate.”

What is investing?

Investing is the act of putting your money into assets – like stocks, bonds, funds, property or businesses – with the goal of growing your wealth over time (we’ll come back to assets). 

Unlike saving, which typically means holding cash in a bank account, investing allows your money to work for you, potentially earning returns through compounding – the further returns that your reinvested returns earn, or dividends – payouts of cash from positive returns. 

Another key difference is that with investing, your money can go up or down in value, which we’ll explain in more detail. 

Whether you're investing for retirement, buying your first home, or building long-term financial security – starting early and staying consistent can make a huge difference.

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How does investing work?

Investing works by buying an asset at its current value, with the aim of selling it at a higher, ‘appreciated’ value, and generating a profitable return. 

Depending on the type of asset an investor holds, any potential gains can be ‘realised’ in a number of ways. For the purpose of this guide, we will focus on stock markets, but this concept can be applied to most investments. Learn about stock market basics.

Think of the stock market like a real market: a place where you can buy and sell your shares. If you buy a share for £10, and the value moves up to £15 in the stock market, and you sell, you have made £5. The sale of your share for a profit is called ‘realising’ your gains. 

For the period you own your share, you are a ‘shareholder’. You can learn about how stocks work here.

The movement of share prices within the stock market relates to the performance and value estimations of a company. As previously mentioned, these prices can move up or down, sometimes dramatically, and this is an important thing to consider when thinking about investing. 

The degree of risk an investor is comfortable with enduring onto assets during price movements, is called ‘risk tolerance’. You can read more about investment risk here.‍

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What are the basic types of investments?

Investors have a number of asset classes they can invest in:

• Equities, stocks or shares are a stake in a company or property. 
• Bonds or fixed-income investments are loans to companies or governments who pay fixed interest as a return. 
• Cash or cash equivalents, such as money market funds, invest in short-term debts.
• Property is where the value of your investment is held within a property’s price.
• Commodities are assets such as gold or silver.
• Cryptocurrencies are digital currencies created and stored electronically. 

A collection of assets is called a portfolio. You can invest in one or more of these assets at the same time, and investors generally choose to hold a mix of asset classes, to make their portfolio diverse. You can read more about asset classes in our full guide. 

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Investing vs saving: what’s the difference

As we’ve already touched on, the value of your investments can go up or down. This differs from a savings account, where you are given an interest rate.

This interest rate is a guarantee that the nominal value of your savings will appreciate, and pay out interest within your savings account. 

For example, if you save £100 at 5% AER, the value of your savings will be £105 at the end of year one. Simple, right? Well, there is an invisible force at work against your money, called inflation. 

Think of inflation, simply, as things getting more expensive over time. If a loaf of bread costs £1, but inflation is 5%, the next year it will cost £1.05.

The same goes for your savings. If inflation is 5%, and your interest rate on your savings is 5%, the purchasing power of your money will remain the same after a year.

With investing, your money is closely tied to the performance of the assets you’ve invested in.

For example, if you bought a share in a company for £100, and after the first year, the value of that company had appreciated 5%, your investment would be worth £105. 

Historically, investment returns have outperformed the interest of cash savings accounts, and can act as a better protection against inflation, if your returns are higher than the inflation rate.

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How much do I need to start investing?

With Chip, you can start investing from £1. Traditionally, investing has been viewed as an expensive activity, due to previously high brokerage fees and minimum investments. 

The rise of online investing has made investing far more accessible, and sustainable for all of us.

Investing little and often, with a proper investment strategy is the most effective way to grow your money, and this is far more important than having loads of cash to get started.

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Understanding investment accounts

If you’re ready to get started with investing, the first step is to choose which investment account is right for you. 

With Chip, you can choose to invest with either a Stocks & Shares ISA, or a General Investment Account. The core difference between these two accounts, is the Stocks & Shares ISA gives you access to tax-free returns (invest or save £20,000 each tax-year across all ISAs) and the General Investment Account does not. 

So, if you have some of your £20,000 allowance to use, a Stocks & Shares ISA could be your best option, and if you have used your allowance this tax-year, you can opt for a General Investment Account. 

These aren’t your only options when it comes to an investment account, and our next guide covers what’s out there in the UK, to give you the full picture. 

Seccl Custody Limited is the ISA Manager for the Chip Stocks and Shares ISA. Fund management charges apply. ISA limits apply. Invest £20k per tax year. Chip does not provide tax advice or financial advice. Tax treatment depends on individual circumstances and may be subject to change in the future. GIA proceeds are potentially taxable, subject to any annual exemption that may apply.

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