Cash vs investing: what if I lose money?

The value of your investments and the income you receive from them can go up and down, and you may get back less than you invest. Any examples are for illustration purposes only. ISA eligibility and tax rules apply.

The UK’s attitude to investing might be about to change. And, with the country lagging some big international peers when it comes to putting our money to work in the stock market, it looks like we need it.

US households have 51% of their financial assets in shares or investment funds compared to just 16.2% in the UK, so says our Freedom to Invest survey. That’s an important gap to close, given the massive potential of the stock market in building wealth for all of us.

It’s also why you might already have seen Savvy the squirrel on a bus stop ad or online, as part of the recent government-backed Invest for the Future campaign aimed at helping savers think about investing in the stock market. Taking the harsh edge off investing and explaining it without the jargon are core objectives of the campaign, so we can hopefully shake the view that investing is “just not for people like me”.

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Curiously though, that doesn’t mean starting by demonstrating the benefits of saving. We’re actually already pretty good at that in the UK, with 72% of our survey saying they had saved in the past 12 months – above the OECD average of 60%. So, we’re good savers but tentative investors, why?

As investing concerns go, not wanting to lose money is probably one of the biggest out there, and it’s one of the main barriers to getting started. So, in the spirit of Savvy, let’s clear the fear with three points to put the question in context and see how long-term investing could help avoid you losing your hard-earned cash:

1. Investing isn’t a punt

Sometimes when savers dip their toe into the markets it can all feel quite binary - we pick a stock and it either goes up or down. But that doesn’t mean it’s a roll of the dice. We get to measure the performance of our companies, assess management decisions and their long-term strategies, and see how good they are at making money alongside their competitors.

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So, we don’t put our money on a stock and cheer it over the finish line - instead we get to make an informed decision by looking up the company accounts on their websites and seeing how business performance is translating into profits, and how the stock is reacting. All of that past performance is no guide to what might happen next but, in the long run, healthy revenue and profits streams tend to end up in positive stock prices as more and more investors want a piece of the business. A coin toss, this is not.

2. Losses can happen. It’s how you deal with them that matters

It is feasible for you to buy a stock and see its value decrease. The company behind the share price might have run into problems, there might be a sectorwide issue or the global economy might have taken a hit in some way. It’s important to know there are always factors out there pushing and pulling at stock prices so dips can happen. Once we get comfortable with that fact, rather than fearing it we can think about preparing for it.

• For me, the most useful element of investing to remember is that time is our friend. Whether a good company is using its profits to consistently make the business bigger and better, or it’s paying out regular dividends that you can reinvest - the effect of racking up that growth over time can be truly staggering. So, while shares can dip and dive in the short term, sometimes it’s just a case of zooming out and making sure you are letting time do the work for you.
• Some investors set a stop loss that automatically sells a stock at a certain level to minimise losses. For example, if you were unsure about a stock in the near term, you might set a stop loss at 10% or 15% below your buy price, which lets you buy in the knowledge that the downside risk is limited. If the fear of loss is stopping you from buying in the first place, it’s maybe worth considering adding stop losses to your arsenal.
• Another tool in the investor’s toolkit is diversification. The aim here is to mitigate a dip in one part of your portfolio with hopeful gains elsewhere. Often, investors set their portfolios up with a range of company sizes, industries and geographies for exactly this reason. You’re effectively spreading risk and opportunity across your portfolio, which can feel a lot more reasonable than pinning all your hopes on one stock.
• Investing icon George Soros once said, “It's not whether you're right or wrong, but how much money you make when you're right and how much you lose when you're wrong.” That means it’s less about trying to get every stock pick right and more about making sure the sizes of your various positions work together to reflect a risk appetite you’re happy with. For illustration’s sake, if your research tells you a burgeoning healthcare stock may be worth buying but will likely carry more risk than a steady dividend payer already in your portfolio, you can create a risk profile to suit your personality simply based on how much you hold of each. Conscious of a drug trial not working out? Maybe that stock gets a small allocation to start with. Has it gone to market and is raking in sales? Maybe it warrants a bigger position. Whatever your strategy, position sizing can help deal with the fear of loss.

3. What’s the alternative, cash?

It’s also worth making sure we have the right comparison to hand. In our heads we can often fall back on the belief that piling up cash in an interest-bearing account might not give us the gains that investing could but at least it’s safe. And that’s a dangerous assumption to make.

As we outlined in our Freedom to Invest survey, if a keen saver had put £10,000 in a cash ISA in 2019 and left it for five years, their account would be worth £8,713 by 2024. [1] Why? The silent thievery of inflation.

Sources: Schroders, Morningstar Direct. Stocks represented by Ibbotson® SBBI® US Large-Cap Stocks, Cash by Ibbotson® US (30-day) Treasury Bills. Data to December 2024.

While our cash savers might have received some interest each year, the rise in prices in the shops outstripped their interest, meaning the pounds in their pockets just didn’t go as far. Had they acknowledged the risk of loss, the merits of diversification and the benefit of time, and invested in a typical global equity fund through a stocks & shares ISA, that initial £10,000 would have become £12,249. [2]

The key in all of this is to get used to ups and downs in the market, and the reality that some investments might not turn out the way you wanted. But, and this is the crucial part, you can do something about it. Whether that’s before you even begin, by setting up strict sell criteria (and maybe even stop losses), or by creating a well-diversified portfolio backed up by a long-term focus - you have control over your investment approach. The market may be unpredictable but what’s equally as predictable is the fight against inflation your cash has on its hands if its own interest rate isn’t matching price rises.

Source: [1,2] Investment Association press release, 27 March 2025. Calculations by the IA using Bank of England data on the sterling weighted rate of return on ISA cash deposits from the household sector between 2019 and 2024. Adjusted for inflation to illustrate the purchasing power in 2024. Inflation adjusted returns of a typical global equity fund are based on the IA Global sector averages.

Important information

When investing, your capital is at risk. The value of your investments, and the income you receive from them, can go down as well as up and you may get back less than you invest. Forecasts aren’t a reliable guide to future results or returns.

Make sure to do your own research on what investments are right for you before investing or consider seeking expert financial advice. Please note that this article is meant for information and does not constitute any financial advice. This is not an offer, recommendation, inducement or invitation to buy, sell, or hold any securities, or to engage in any investment activity or strategy.

Robinhood doesn’t provide tax advice. You should seek advice if you have any questions regarding the impact your investments will have on your income tax and tax filing requirements.