Managing investments
You don't have to spend all day in front of a computer screen following the markets, or read every word on the business pages to manage your own investments.
As with many things in life, the principles of managing your own investments are simple, but you'll need to work through a bit more detail to give yourself the best chance of success. We'll take you through the main points that you need to consider:
Have a strategy
The first thing you need to consider is what you're investing for.
Are you looking for extra income in retirement, or are you looking to invest for something specific, for example a child's education or a career break? Your investment goals will play a large part in determining your investment strategy.
Another key factor is how much risk you're comfortable taking with your money.
When you've worked out a strategy, follow it, but review it regularly and when your circumstances change.
Having a mix of investments means that at any given time the better-performing ones can help offset those that aren't doing so well. You can spread risk (this is called 'diversification') by investing in different asset classes (cash/money market instruments, including cash, bonds, property and shares) and through investing in different sectors or geographic regions.
Keep the taxman at bay
Why pay unnecessary tax on your investments?
You can invest up to £10,680 this tax year (2011-2012) in a Stocks and Shares ISA and you won't pay any tax on the growth. You don't even have to declare your ISA investments on your tax return.
And when you invest into a pension, if you are a basic-rate taxpayer, for every 80p you pay in, the taxman adds 20p. Higher-rate taxpayers can claim additional tax back via their tax return.
Do your research
There's lots of information in the public domain about investments.
Fund factsheets, for example, will tell you what the fund's objective is, who manages it and how it has performed in the past (although of course this isn't a guarantee of how it will perform in the future).
It's important to know how volatile a fund is (how much its value fluctuates) you can check this with your provider. Understanding how markets work will also help you to pick investments that suit your needs.
Smart planning
It's important to have a clear idea of what your funds are meant to be doing, so you can monitor their performance effectively. And with such a large choice of funds available, switching between them to one that is performing better is relatively easy. If you're unsure about whether or not to change funds, you should speak to a financial adviser.
Important legal and regulator information
References to legislation and taxation are based on Standard Life's understanding of law and HM Revenue and Customs Practice. Legislation and taxation are liable to change in the future. The value of investments, and any income from them, can fall as well as rise and you could get back less than you invest.
