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When you invest your money, it simply means you’re buying a piece of something that could go up in value over time. And that means you could get back more than you paid for it when you choose to sell it, although there’s no guarantee.
Nowadays you can invest in lots of different things, from shares in companies to gold. These different types of investments are usually put in categories, known as asset classes . Generally it’s a good idea to have a mix of different types of investments from different places.
Most people invest because it gives their money the chance to grow. That’s because investing your money gives you the potential for higher returns than if you were to save it in a standard savings account. Your money is generally secure in a bank or building society, whereas there are risks involved with investing.
The longer you leave your money invested, the more likely it is to grow. This is because each year you have the opportunity to achieve growth, not only on the money you’ve invested, but also on the growth you may have already experienced. This effect of growth on growth is called ‘compounding’ and it can help to build up the final value of your investments.
Want to know more? Here are some more reasons to invest.
There are lots of ways you can invest your money. But most people investing for a long-term goal (such as retirement) will invest in a pension plan or a Stocks & Shares ISA. That’s because they’re both tax-efficient ways of potentially building up a pot of money over time.
Find out how pension plans and Stocks & Shares ISAs compare when it comes to investing your money in our handy guide.
Your investment choices can make a real difference to what you get back in the future, so it’s important to regularly review them to make sure they’re still right for you.
No matter what stage you’re at in your journey or how knowledgeable you are about investing, we can give you the support you need.