With savings rates being at a historical low for some time, you may be looking at different ways of protecting your hard-earned money from inflation. Investing is a more adventurous approach with your savings that might now be worth considering.
Purchasing stocks and shares is one way to do this. Stocks and share purchase is seen as a long-term investment. Long-term is five to seven years plus. It may pay you to take a risk and branch out from a standard savings account. Some may say that you are open to “inflation risk” by keeping your money in a savings account. The interest paid to you is less than the rate of inflation, so your money is losing its buying power in real terms each year.
Where is the value when investing in stocks and shares?
Your return comes in two forms-
If the company, you have invested in stays profitable it may pay you a dividend. The dividend amount depends on the type of share that you hold. Payments are usually made twice a year and you normally have a choice of taking the money as cash or reinvesting it in more shares with the company.
The value of your share may go up in value. There are many reasons why the share price may change. These may be-
- Size of their market share.
- Experience of the management.
- Brand identity and its popularity within its market.
- Company profits.
- Market sentiment.
The share price is often driven by the expectation of the company’s performance. It will rise if there is significant interest or if traders have high expectations that the business will do well. Likewise, the value of the shares may fall if it is felt that the company is not doing well.
If you decide to invest.
The following points are worth considering-
You can lower your exposure to risk by diversifying your investments. The saying of “not putting your eggs all into one basket” stands true.
- Invest for the long term. That’s five to seven years plus.
- Be fully aware of your tax position and how your investment may impact on this.
- Be aware of the fees. Look for value. Cheapest is not always best.
- Regularly review your investment portfolio.
Investing in stocks and shares can provide a higher return than cash that’s held in a savings account if it’s viewed as a long-term investment.
What are the downsides?
The downsides are that there are no guarantees. You may not get some or all of your money back if you withdraw your investment at the wrong time.
How Anstee & Co can help you with investing.
We are a firm of Independent Financial Advisers (IFA’s). That means that the financial advice we provide is unbiased. We will look at all the financial solutions available to you.
The initial meeting is at our expense. We will only make a recommendation when we fully understand your financial situation and what you are trying to achieve. Importantly, we will find out your attitude to risk.
- Kettering, Northamptonshire
- Stamford, Lincolnshire
- London, Pall Mall, Greater London
Also, our financial planners live and make use of meeting rooms in-
- Bedford, Bedfordshire
- Market Harborough, Leicestershire
- Northampton, Wellingborough, Towcester and Brackley in Northamptonshire
Finally, why not contact us today to arrange an appointment to see how we can help you?
The information contained in this article is for information purposes only and does not constitute advice. No action should be taken based on this information alone.