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Investment workout in January

After paying for Christmas, thoughts in the New Year should turn to boosting the family’s wealth through saving and investing. In an uncertain world, all of us would like all the “aces” in our saving and investment strategy, whether in the bank or in the stock market. Will you be giving your saving and investing strategy a January workout?

Aces high

Aces high

You won’t hold all the aces, if you stash your cash under the bed, as your money won’t grow; it needs to be yielding a return, either using interest or dividends and share price growth.

Inflation is the bogyman

Within your strategy, beware of reckless caution. The average cash deposit account pays 1% interest, but this is less than the current rate of inflation of 3% which means you’re losing money in real terms. So, if you want to make your savings work, here are some investment options (remember that your money goes down as well as up):

The nuts and bolts of investing:

  • Use a share ISA 2017/18 which has a limit of £20,000. Invest in company shares, investment trusts or Government bonds. A share ISA offers the possibility of higher returns than a cash ISA. Only do it, if you're happy to take some risk with your savings. Any capital gains you make from investments and dividends from a share ISA are tax-free.
  • Don't put all your eggs in one basket. The idea is to 'diversify', which involves dividing up your money across a portfolio and investing portions into varied companies, asset classes or different global markets.
  • Invest through a fund manager that uses the expertise to buy and sell shares (or bonds) on your behalf to maximise the returns.
  • Do your homework to pick the best fund that meets your financial goals and suits your appetite for risk.
  • Consider ignoring a fund manager to pick stocks, and use tracker funds that mirror the performance of the stock market indices; being run by computers they are cheaper.
  • Buy through a DIY investment platform to save money. Buying your units directly from a fund manager is the most expensive option. It’s cheaper and easier to buy through a fund supermarket, which lets you hold, manage and review your investments.
  • Invest regularly to minimise losses. It is impossible to pick the perfect moment to invest, so improve your chances of maximising your returns by drip-feeding your money into a fund on a regular basis, for example once a month, rather than investing a lump sum.

Most funds will accept monthly deposits of £50 or lump sums of between £500 and £1,000. Monitor the performance of a fund over a period of five or ten years, rather than just looking at whether a fund did well last year. As you’re investing, this type of saving is for long-term financial goals, such as retirement or a child's education, rather than a house deposit or a new car.

ChildMax pays your take home salary while you’re on 12 months’ unpaid leave looking after a sick child. Premiums start from £49.50 or for easy budgeting an initial payment of £8.25 followed by eleven monthly payments of £3.75. Get a quote with 5 questions which takes one minute.

Visit at www.insurewithmax.com or call the UK call centre 0333 323 0098 for more information.

Important: This post is by insurance professional and not financial expert. Tax rules are subject to change and depend on your individual circumstances. If you require further information please speak to an independent financial adviser or similar professional.

Sources:

https://www.moneywise.co.uk/first-time-investor/investing/10-tips-beginner-investors

http://www.which.co.uk/money/investing/stocks-and-shares-isas/guides/what-is-a-stocks-and-shares-isa

Date: 15 January 2018 by Max Robinson