Investing money is a fantastic way to prepare for the future – though that’s not to say it’s a simple, straightforward process. There are lots of factors to consider, and lots of risks to weigh up before you make the steps to investing money. Mr Lender has put together some tips and guidance on how you can invest money, and prepare for your future.
Why should you invest?
Investing money is a great way of building your savings and earning a bit of extra cash. Whether it’s to buy a house, pay for a wedding, or save for retirement, investing money can get you there. While putting your money into a savings account can certainly help, the interest rates are often fairly low meaning the return on your savings isn’t going to be great. While investing money is likelier to make you more money, it is far riskier and isn’t a decision to be taken lightly.
One reason to consider investing money, is to build up your retirement savings. If you’re still of working age, it would make sense to start making investments now so you’re covered for when the time comes to retire. As the State Pension increases at a much slower rate than the cost of living, it is vital to make sure your retirement fund is sufficient enough to see you through. Investing money is a good way to do this.
How much do you need to start investing?
You can start investing money at any stage, regardless of how much money you have. You could start off by putting your money into a savings account then later transferring to an ISA, or using your savings to buy stocks and shares. No matter how you choose to invest, consider your options in advance to make sure you’re getting the best deal suitable for you. Another thing to consider, is how much outstanding debt you have. If you are in debt of any sort, pay this off first before you look into ways to invest.
How to invest
There are a whole host of ways to begin investing money, from stocks and shares to ISAs – there are lots to consider. If you’re unsure as to what is the best option for you, consider talking to an Independent Financial Advisor (IFA) where they can advise you on the best ways for you to invest your money. Here are just three options which you may want to consider:
Standard ISA
Opening an ISA is one of the best ways you can invest your money with little to no risk. With an ISA, you can save up to £20,000 a year tax free – this makes it a great way to save if you have larger amounts of money available. An ISA is also a great way to invest your money as your withdrawals are limited. This means you’ll be less likely to withdraw money from your savings, meaning they should then build up quicker.
Stocks and Shares ISA
You can also invest in a Stocks and Shares ISA. This is another great investment opportunity which could make you plenty of money. The difference between a standard cash ISA and a Stock and Shares ISA is that while a cash ISA is just somewhere for you to save your money, and Stocks and Shares ISA is a way for you to invest your money in government and corporate bonds, as well as lots of other investment opportunities.
Shares
Another great way of investing money is to buy shares. Some employers will have a share buying scheme which you can get involved with after a certain number of months. It’s worth checking to see if your employer offers this scheme. You can also buy shares in an external company if wanted to as well. Investing in shares can be risky, as it all depends on the value of the company. However if all goes well, you could earn yourself a decent amount of money.
Investment apps
If the thought of investing large sums of money into stocks and shares is a little daunting, maybe start off small by investing small amounts of money at a time. Seeing as it’s almost possible to do everything on our smartphones nowadays, it’s no surprise that we can now invest money through our phones too. MoneyBox is an app that does just that – it’s a tool to help you to manage your money and make investing that little bit easier.
You can use the app to invest in a Stocks and Shares ISA, a General Investment Account or a Junior Stocks and Shares ISA. MoneyBox works by rounding up your purchases, and investing any spare change. For example, if you spend £2.47 on a coffee, MoneyBox will round up the purchase to £3, and then invest the remaining 53p into stocks and shares. Once your investments begin to pay off, you can withdraw your funds at any time. If you have invested in a Junior Stocks and Shares ISA, the child can withdraw their money once they reach the age of 18.