For many people, making their money grow is the main motivation for investing. However, it’s not always easy to know the best way to achieve growth as it can depend on lots of factors.
How tolerant you are to risk, the time period you would like to invest over and market forces at play can all have an impact on the type of investment plan you should go for.
Here are a few things to think about when it comes to investing for growth.
Is investing right for me?
An investment is a gamble which may or may not pay off. However, with savings rates extremely low at the moment there aren’t many options for people who want to make their money grow. So, if you are comfortable with risk, and your savings goal is more than five years away putting your cash into investments could allow you to earn more from your money.
What can I invest in?
For most people investing means putting your money in the stock market, i.e buying shares in a company in the hope that they will increase in value and you will make a profit.
You can also invest in other products such as bonds, funds, Government bonds or basically anything you can buy that might increase in value, houses, land, vintage cars, start-up businesses, art, wine… the list goes on.
Most people choose between the four main types of investment, known as ‘asset classes’: shares, cash, property or fixed interest securities (also called bonds).
Where should I put my money?
The various assets an investor owns is called a portfolio.
There’s no such thing as an investment without risk, but the amount of risk varies between types of investment. Money you place in savings accounts risk losing value in real terms over time, because of inflation. Index-linked investments risk losing interest if inflation falls. Stock market investments can beat inflation and interest rates but share prices can fluctuate and may be low when you want to sell and cash in on your investment.
As a general rule, spreading your money between different types of asset classes reduces the risk of your overall portfolio under-performing.
How do I manage mixed investments?
A good financial adviser can help you with this and pick good mixed asset investment funds which match your investment goals.
Funds that we use at Amethyst, are ‘diversified’ which means your investments are spread across different types of assets. They typically hold 6,000 to 20,000 shares and bonds around the world – which helps to reduce your risk.
These funds are monitored for performance and stick to the original balance of shares and bonds. All you have to do is pick the fund that best fits your investment goal and attitude to risk, and we will do the rest for you.
How long before I see returns on my investments?
We would usually recommend a time period of at least five years, in order to smooth out some of the market volatility that is likely to occur.
We would put your investments into ISAs for tax efficiency, or Unit Trusts which can be transferred into your £20,000 ISA allowance (each year) and Onshore and Offshore Investment Bonds.
For help with investments or any other financial advice, please do not hesitate to get in touch and one of our team will be more than happy to help.