Common ways to invest your money
Firstly, make a plan based on where you are in your life and your long term goals. Younger people may fancy gambling on high-return investments, but a couple nearing retirement may be wise to opt for a more conservative approach. Establish your budget and try to set aside a certain amount every month to invest in something that suits the level of risk you’re prepared to take.
Here are some of the most popular ways in which you can invest your money:
Safe and straightforward, but make sure you take advantage of the best rates and move your money around if necessary. Remember to use your full tax free Individual Savings Account (ISA) allowance. Up to £5,340 in cash or £10,680 including stocks and shares can be tucked away from the taxman every year.
Bonds and A type of lending investment issued by a state or a company, a bond is a debt security, whereby the issuer of the bond owes a debt to the bondholder. They are flexible and money can be invested for the short, medium or long term.
Investing in the stock market means buying shares, which represent proportions of ownership in a company. Buy and sell your shares at the right time and you could make a mint, but remember the risks: share values fluctuate and you’ll lose out if the value of your shares drops or a company goes under.
A lucrative option if done in the right place and the right way. Gilston Lodge in Chelsea, bought for £5,000 in 1958, recently sold for close to £10m according to Primelocation. Buy to let somewhere with a solid long-term demand for housing, such as London and, as an investor, you could be looking at long-term capital growth with inflation protection and a desirable annual rental return.
If you want to be sure of an income in retirement, investing in a pension is your most tax-efficient bet. And if your employer is prepared to match the contributions you make, all the better. An online pension calculator will help you calculate how much you are likely to need to invest to achieve the income and lifestyle that you want when you retire. You are eligible to claim a State Pension once you have paid enough National Insurance contributions and when you reach State Pension age. Find out how much you’ll be looking at, and when, with a state pension forecast.
Develop an investment strategy that suits you; one that will provide steady growth over the years. Never put all your eggs in one basket - invest regularly in a diversified portfolio. Monitor your accounts frequently and revise your plan where necessary. What works for you in the early years may not be appropriate later, so make sure your investment strategy continually evolve to meet your financial goals.