People save and invest for various purposes: for holidays, home improvements, cars, deposits for house purchase, children’s education, old age, and general security. Some of these are short term objectives and others long term.

The single biggest long-term objective is usually the provision of a retirement income. The time horizon of the investment will influence the nature of the investment. Savings for a holiday are unlikely to be put into a risky investment such as shares. Saving for a pension is unlikely to be in low return investments such as bank or building society accounts. The largest investment item for many people is their pension fund.