The recession may not have hit you personally. However, the increase in financial uncertainty may have prompted a decision to better safeguard, or boost, your wealth. The best ways to invest money is to make your money work for you and to do this you need to invest it.
Money sitting in a current account won’t benefit from interest rates at all; any pithy interest you receive on your balance will be made negligible by the rate of inflation. Those sensible with money will always invest the cash they make through working and possibly in more than one different way. Here are some different investment ideas, including an assessment of their likely risk.
Savings and ISAs
These are bank accounts that offer higher rates of interest than standard accounts and therefore make more money for you simply by switching. Everyone in the U.K is entitled to take out a cash ISA (an account which will not deduct tax from the interest earned) up to the annual value of £5,800. These types of accounts are entirely risk free and because of this will pay lower dividends than higher risk strategies. However, they are a good safety net.
Though the property market may be more sluggish than in recent years, the fact of the matter is you will always gain capital on property if you are willing to wait for a period of time. Prices may fluctuate but the general pattern is that prices always go up. What’s more you can potentially make money on the property whilst waiting to cash in on a profitable sale by renting it out. Rental values are often higher than mortgage repayments.
Stocks and shares
Stocks and shares are where you buy shares in companies and so enjoy (or suffer) any changes in their share value. This is a higher risk strategy as share prices can go down, but if you are willing to wait for a period of time then the dividends can be vast. Only invest what you can afford, and utilise the services of a fund manager or brokerage who will look after your portfolio for you.
Rather than owning some of the company, bonds allow you to own credit for the company, and as such are not subject to the same fluctuations as stocks and shares. They will usually offer a consistent interest rate, allowing you to cash in on them after a period of time. This is usually about 10 years or more, so if you are willing to wait, bonds can offer better returns than savings accounts whilst still enjoying minimal risk.