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Investments - getting started

Make a plan

We think saving and investing is easier if you have a plan. That means thinking what you really want to aim for and when, and working out how much you can set aside towards it - whether that’s saving for university fees or saving for your retirement.

Saving for a Goal

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 Saving for a Goal transcript

You have a goal and you're now ready to save towards it.

Where do you start? Here is a plan.

Firstly, set your sights on what you’re saving for and when you’ll need it by.

An engagement ring...

A new car...

...A house deposit perhaps.

Pin it on a noticeboard, or somewhere you’ll see it regularly.

And before you start saving, prioritise.

Pay off costly debts first, saving you high interest payments.

Be prepared for unexpected emergencies like car repairs, a dentist bill or a
new boiler - keep 2 months’ salary aside, just in case.

Look at your monthly budget and work out how much you can put away each
month. And regularly review this budget.

If a direct debit comes to an end, a good idea is to put the money into your
savings before you start getting used to it.

Remember that the more you put away...

...The quicker you could get what you’re saving for!

Make sure your savings are as tax efficient as possible. Putting your money
into either stocks and shares or a cash ISA is a good way of doing this.

If you’re investing for the longer term, you’ve an opportunity to invest in the
stock market for greater potential returns, as you’re more able to ride out
market ups and downs.

Over the longer term, equities have outperformed many other types of
investments. This could also help protect you from the impact the rise in
everyday prices can have on the value of your cash savings.

For example, did you know that a loaf of bread at £1.50 today could be nearly
£12 by 2050!

But the stock market doesn’t offer any guarantees - your investments could go
down as well us up, so if you’re saving for less than 5 years you might want to
think about bank accounts or a cash ISA.

So to sum up, set your sights, look at your finances, work out your goal and
choose the most tax efficient way to save.

The most important thing is to start now - the earlier you start the easier it will
be to reach your goal!

If you would like any more information, give us a call.

Start early

The earlier you start investing, the better chance you’ll have of reaching your goal. The first year you invest you can only earn a potential return on the original investment. But the next year, you can earn a possible return not just on the original investment but also on any return you earned in the first year. So any return in one year can potentially generate return on itself the next. And so it carries on with a snowball effect that potentially compounds year on year. This means your money has the opportunity to grow faster and faster as the years go on so the earlier you start the better.

Choose the right investment for you

Everybody’s different and there are many investments to choose from so it’s important to get the right one for you. This will depend on how hands-on you are, how much risk you take, and how long you can invest for. If you’re saving for less than five years, there’s less time to recoup any losses so think about bank accounts or a cash ISA. But if you’re investing for the longer term, you’ve an opportunity to choose more risky investments, like company shares, for greater potential returns as you’re more able to ride out market ups and downs.

Embrace the market

Investing in company shares, or equities, means you effectively own part of a company, entitling you to a share of the company’s profits, both now and in the future. Over the long term, equities have outperformed many other types of investment (although past performance should not be used as a guide to future performance) and investing in equities can help protect you from inflation. This is because company profits tend to move in line with the cost of living over the long term. As with any investment the value of your fund can go up or down and may be worth less than what was paid in.

How to choose your investments

Stay the course

Investments can and do fall. It can be hard to keep your head at times like these but if you’re investing for the long term it can be ok. The value of your investments only really matters when you need to take money out as history tells us that markets recover over time.  So if you can stay the course you can hopefully ride out the storms. And before you approach the stage when you do need to take money out, that’s a good time to think about switching to more stable investments.

As with any investment, the value of your fund can go up or down and may be worth less than what you paid in.

Risk Questionnaire

Risk Questionnaire

Different investments offer different risk. What's your attitude to it?

FAQs

"How much can I pay into a Stocks and Shares ISA during this tax year?"

"How much can I pay into a Stocks and Shares ISA during this tax year?"

For the 2014-15 tax year between 6 April 2014 and 30 June 2014 you can invest £11,880. Your spouse or civil partner can invest the same giving a potential joint investment of £23,760. From 1 July 2014 the limit changes to £15,000 with the potential joint investment rising to £30,000.

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