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Image source: Getty Images<\/p>\n
We\u2019re often told to save for retirement, but compared to investing in UK shares, this may secretly be bad advice.<\/p>\n
Even with interest rates still elevated, no risk-free savings account has matched the performance of the stock market in 2025.<\/p>\n
Fun fact: the FTSE 100 has delivered close to a 21% total gain since the start of the year, compared to the roughly 5% that some of the most generous savings accounts have offered.<\/p>\n
Now that interest rates are steadily falling, savings accounts are becoming even less attractive as a retirement building vehicle. And that\u2019s only being compounded by tax hikes on interest and an incoming slash to the Cash ISA allowance in 2027.<\/p>\n
So with that in mind, let\u2019s explore some simple strategies for building more retirement wealth by investing in UK shares.<\/p>\n
Investing vs saving<\/p>\n
Having some cash savings is always a good idea. Apart from providing easy access to money when needed, it can serve as a handy emergency fund when an unexpected spanner\u2019s thrown into the works. But sitting on a large cash pile over the long run can be quite detrimental.<\/p>\n
Let me demonstrate. Over the last 10 years, the average interest rate earned on savings has been close to 2%. Don\u2019t forget, prior to 2022, interest rates essentially hovered near zero. By comparison, the FTSE 100 has generated an average annualised return of 8.6% over the same period.<\/p>\n
In terms of money, that\u2019s the difference between turning \u00a31,000 into \u00a31,221.20 or \u00a32,355.92 \u2013 93% more wealth<\/a>. And that\u2019s despite the stock market suffering through a major crash in 2020, followed by a painful correction in 2022.<\/p>\n Understanding risk vs reward<\/p>\n Savings accounts have one massive advantage over investments. They\u2019re basically risk-free. Even if a bank goes under, up to \u00a3120,000 is protected by the Financial Services Compensation Scheme.<\/p>\n