Later in life, many of us must consider what options are available to us in terms of how we use our money. Most people would like to reap the rewards of the money they have. This is why a lot of people turn to investing. The prospect of investing money for the first time can feel like a minefield, so we wanted to break down some of your options and look at the risks and rewards of each.
What is an Investment?
An investment means storing your money where it will hopefully earn interest. An investment is always a gamble though, and it is crucial to understand this fully before you begin. You can never guarantee that your investments will earn interest. In fact, there is always a possibility you may lose money. As a basic rule, you should never invest more than you can afford to lose.
You can invest in almost anything from shares to property to art. Although some things might seem to be safe bets, nothing is foolproof and you should never assume as much.
Important Things to Consider Before Investing Money:
- The greater the return, the riskier the investment is likely to be.
- Never put all your money into one investment. Although the potential of a higher return can be tempting, you also risk losing everything if the investment depreciates dramatically. Invest in different areas of the market if you can.
- How much do you want to invest? Only ever invest what you can afford to lose. If you want to build up your savings before investing money, check out our top finance tips.
- Investments generally take time to accrue value. Therefore, you have to be prepared to play the long game. Most investments begin to offer worthwhile returns after around 5 years. If you are looking for a quick boost to your wallet, you would be better off keeping your money in a savings account.
- Make sure you can check on your investments regularly. This is especially important if you are planning to make several investments. Also, consider your own state of mind. Have you become more of a risk-taker lately? Are you still being sensible with your money? This will help you be more logical when investing money.
What is a Share?
In short, a share is a unit of value for a company. The company will be divided up into a certain number of shares. Each share has a monetary value. As the company grows, the price of the shares will increase. Alternatively, if the company does poorly, the share price will go down. Factors like supply and demand or interest rates can also affect share prices. Before you begin, get comfortable with what trading stocks look like and what information you will need to know in the future.
What is a Fund?
A fund is a ready-made collection of investments, often managed by experts. Funds include about 30 – 60 different investments. Funds are, on the whole, a lower-risk option. If one investment tanks, the others will probably still be fine, unlike with a share. This also gives you the added opportunity of being able to build up your portfolio with a diverse range of investments.
Investing in Property
If you’re new to the world of investing money, you might feel most comfortable with the idea of investing into property. It feels like something we can get our heads round better than stocks and shares. You can invest by purchasing a property outright, or by investing in real-estate funds.
There are lots of factors to consider before buying property, such as whether you want to purchase to let or to sell. Remember that property can drain money as easily as it can give returns. Property requires money to maintain, which is not true of shares or funds. Ensure that, when it comes to property, you still do your due diligence just as you would with any other investment.
What is an ISA?
An ISA is a savings or investment account that you never have to pay tax on. You can save up to £20,000 a year. You can split your money between multiple ISAs such as cash, Help to Buy or Lifetime ISAs. In addition, you can change your ISA to a different provider whenever you like. In fact, keeping an eye out for the best interest rates is highly recommended.
Choosing What is Right for You
Whatever the investment you choose, make sure you do all the necessary research. Consult experts if you can and make sure to prepare for every eventuality. Never invest more than you can afford to lose and, if you can, spread your money throughout multiple investments to reduce the risk. If you feel as though you are ready to invest, we have a detailed guide that can help you break through all the technical jargon.
Careline – The Investment You Can Rely On
Unlike shares or property, a Careline alarm is a risk-free and affordable investment! Our pendant alarms ensure that you (or your elderly/disabled loved ones) are protected at home. Our Emergency Call Handlers are available 24/7, 365 days a year to respond to emergency calls in seconds. Careline alarm users can press their pendant buttons whenever they feel unwell, have a fall, or just need assistance.
You can order your Careline alarm online today.
Editor’s Note: This article was updated on 23rd September 2021 to reflect current information.