In this series of blog posts we will be breaking down both the basics and the complexities of investments.
To start off…
Things you need to consider
Investing is based around the prospect that you wan your money to earn the best return possible without taking undue risk.
It is vital that you invest in a way that’s right for you and achieves your goals.
What are your long-term goals?
Identifying your long-term financial goals gives you purpose for saving and investing over a longer period. Goals may include:
· Funding university
· Providing an income for later in life in addition to your pension
· Having more to leave for your family after life.
How much should you saving and investing?
The first step you should take if you decide investing is for you is to review the savings and investments that you already have in place. Then, to decide whether you can afford to add further lump sums or to save regularly, you’ll need to:
· Allow for any planned expenditure over the next 5 years
· Make sure you have enough income to cover your day-to-day lifestyle
· Keep money back for any unexpected emergencies that may require money
Savings in the short term?
Savings can earn you interest and tend to be the best at reaching a short-term goal or for allowing easy access to some of your money.
Investments for long-term goals?
Investments can offer the potential for a greater return on your money than a savings account, however no investment is risk free. The degree of risk varies depending on the type of investment.
Finding a balance
Investments, ideally, should be held for the medium to long-term. This can help minimise the short-term impact of varies risks that can affect investments
Another important factor you must consider to find a balance, is to ensure that the overall risk and potential growth across your savings and investments is right for you.