We want to help you build confidence and deal with the challenges that surround financial decisions.
With high interest rates and instability still plaguing the markets, I thought I’d take this opportunity to answer the questions we are asked most frequently about the pros and cons of investments.
Should I invest my savings?
Even though they are rising, interest rates remain lower than inflation, meaning money in the bank loses its spending power year on year.
I think we all know investing is a good idea in the long term, but most of us believe we don’t have the time, money or experience to do it successfully. It is easier, therefore, to put all thoughts of retirement on the backburner and leave your savings where they are. A bit like that diet that starts on Monday…
If you want to see real returns that will provide an income once your working days are done, try speaking to a financial planner. We can help you decide if investing is the route for you.
When should I start investing?
Start today. Do it now – it’s important! You are never too young to start thinking about your future and the earlier you do it, the more options will be available to you down the line.
If you start by making regular savings straight into an investment fund you will see real growth in the long term.
How much should I invest?
It doesn’t have to be much. You can start with 5-10% of your income. Little and often is key.
Make saving a priority by doing it at the beginning of the month. It should be as important as paying your mortgage. Set up a regular standing order and with any luck, you won’t notice the money coming out of your account.
The additional benefit of regular saving is compound interest. Any interest made on your original investment is reinvested, which, in turn, creates more interest and your savings pot grows faster. The longer you hold your investment account, the more interest you will make.
What should I invest in?
How do you decide where to invest? You could pick one of the thousands of companies on the stock market, but what if it fails? All your money is gone in one go.
At Belmayne, we believe the best way to invest is to spread the risk far and wide. It is called diversification and can encompass multiple industries, countries and market sectors. If you have particular ethical preferences, these can be built into your portfolio too.
So why investments and not savings?
Despite the increases we’ve seen in interest rates, 2.5% is about the best you can earn at the time of writing with a bank. Inflation is currently sitting around 10%, so the value of your savings is actually decreasing rapidly.
Investing is no guarantee of financial success, but the more risk you are willing to take, the greater the potential rewards. It doesn’t have to be high risk, however. Options are available for the more cautious of you out there.
Regardless of your attitude to risk, investing, in my opinion, is the best way to create real growth in the long term.
To find out more about the benefits of financial planning, or to arrange a free initial consultation with one of our experts, don’t hesitate to contact me on (01246) 298181 or email: melanie.coleman@belmayne-ifa.com
