What Are The Best Investments?
You've worked hard for your money and managed to build up your savings, but what options are available now if you want your savings to work harder for you? Whilst savings are ideal for the short term, investing your money for the long term may be the next viable option. Deciding on investments can be tricky as the best investment for you will entirely depend on your personal and financial circumstances.
Firstly, your best investment opportunities will vary depending on:
Investment time frame: How long are you willing or able to lock away your investment for? Most investments are held for a long period of time from 5 years upwards and you will not be able to access your money during this time.
Attitude to financial risk: Investing comes with a greater element of risk and how comfortable you feel about is a personal matter. However, risk and the size of the potential yield are inevitably linked. The more risk you are willing to take, the greater the potential for gain. You may also wish to consider diversification: spreading your capital over different types investments to minimise risk.
Your preferred investment methods: You may prefer to invest directly or through a pooled investment. This will depend on your investor confidence and on possible investment charges and fees.
The purpose of your investment will also play a big factor in deciding on the best investment options. Do you want to invest for:
Income: Perhaps you require additional income to supplement your salary or to top up your pension? Some investments can pay out regular sums of money.
Capital Growth: Investment growth will usually occur the longer you can invest your money for. Your investment will grow in value according to stock market performances.
Or Both: Some investments allow both income and capital growth but may come with a greater risk or fee.
A Selection Of The Most Popular and Best Investment Opportunities Available:
Investment Bonds: A lump sum is invested to a life assurance company to provide growth potential. Because the money is paid to a life assurance company, the money will remain with them until it is cashed in or you pass away. One advantage of investment bonds is that they will pay out an amount in the event on your death.
Income Bonds: Are also known as 'fixed income' bonds and are able to provide a stable and regular income which can be paid in various frequencies i.e. annually, monthly. As the term 'fixed' suggests, interest rates on income bonds are frozen. So, if general interests rates fall then an income bond will return a good yield. Accordingly however, if general interest rates rise than your income bond will remain on the fixed rate.
Investment Fund: A type of pooled investment, also known as a collective investment scheme, meaning your investment is pooled with other investor's money into a fund thus spreading the risk of investment. This is done through a fund manager who invests money on your behalf according to the fund's terms. Investment funds can be complex and there are various types available such as investment trusts, unit trusts and split capital investment trusts. A financial advisor will be able to explain the best investment fund in relation to your financial options.
Growth Investment: A type of medium to long term investment which has the potential to grow in value because it is closely linked to stock market behaviour. You may be entitled to receive substantial bonuses if stock market values rise above a certain set level. Similarly, if values drop below a certain level you may loose your capital. Growth investments are high risk but high yielding and the majority are only sold through an investment advice team.
Investing can be a rewarding financial experience although it can be complex and carry a degree of risk. Seeking professional advice from an investment advice team will most certainly help to understand the different types of investments available and which may provide the best investment according to your financial circumstances.
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