Investing can seem too confusing, too risky, 'not for us'. Like everything, the more you know about it, the better informed your decisions are.
There are many articles which call themselves ' investing for beginners' but maybe a better place to start is to simply understand the 'point' of investing. Why could it be a good idea? Why should you consider it?
It is always best to have some money readily available in the bank in case of emergencies, but investing gives you the opportunity to make your money grow and worker harder.
One of the main principles of investing is that your money could grow (which is called the returns) but there is a risk you might lose money - it is all about balancing the two.
But I’m not comfortable losing money
If you’re already thinking about the word 'lose' and thinking that you aren't comfortable losing ‘any’ money - it's worth considering that if you have money in savings, there's a chance you're already losing money because of inflation. Inflation, put simply, is the rising cost of goods you buy. If inflation is increasing it means you can buy less with your money.
We've used a rate of inflation of 2.5% each year. That means the purchasing power of £10,000 today could be worth just £5,394 in 25 years. The actual rate of inflation could be higher or lower.
So what do you need to know if you are considering investing?
First things first. Not all investments are the same –some are higher risk and some are lower risk.
So, let’s start with you - you'll need to think about what type of risks you can, and are comfortable, taking. There is no right or wrong answer to this.
- Some people want to invest in very low risk funds. These funds have a lower risk but they are likely to have lower returns.
- Some people want to invest in higher risk funds. These funds have a higher risk but there is also the potential for greater returns.
With investing, the value can go down as well as up so you may not get back the amount you put in. There is no need to think about any of this on your own - help is always at hand. A financial adviser will look at your needs, discuss the level of risk you are comfortable taking and balance that with the level of rewards you are aiming for. Then they will recommend the options that are right for you. After all it is their job to be the expert – not yours.
How can we help you?
By not putting all your eggs in one basket, it could help reduce the risk of losing money.
We spread your money across a number of different types of investments.
And have a wide range of investments so you can find something to suit your needs at a level of risk you're comfortable with.
Find out more about our investment solutions.
What is the value of financial advice?
If you are ill, you go to the doctors, if you are moving house you use a solicitor – we seek out experts for important decisions because that’s their job.