Life

5 reasons why you should be investing

Struggling to find a savings account with a decent interest rate, or looking for a way to help meet your long-term financial goals?

Why not consider investing? Here are a few reasons why it could be a good option for you.

1. There’s the potential for better returns

Investments give you the opportunity to aim for stronger returns than you’d get simply keeping your cash in a savings account.

In return, you accept an element of risk and the fact that the value of your investment can go down as well as up over time

2. Cash savings can erode over time

While some people view cash as a safe haven, if you’re saving over the medium or long term there’s a chance that your nest egg can erode in value over time if the interest rate on your account doesn’t keep pace with inflation. So, the buying power of your cash can be reduced.

3. Investing can help you reach long-term financial goals

Investing is generally thought to be a best vehicle for meeting your long-term financial goals.

There will almost certainly be ups and downs during the duration of any investment, however taking a longer term view means there is plenty of time to ride out any market fluctuations.

4. You can choose a level of risk you’re comfortable with

The element of risk that comes with investing can seem daunting to would-be investors, but levels of risk vary.

Usually, the more risk you’re willing to take on, the greater the potential returns, so you can choose to be more adventurous in the hope of higher rewards or play it cautious and opt for a lower risk strategy.

There are also ways to help mitigate risk, including diversifying your investments across a range of assets, sectors and geographic locations.

5. Investing doesn’t have to be as complicated as you might think

Similarly, some people are nervous about investing as they think it’s too complicated and that they need to fully understand the ins and outs of the financial markets before dipping their toes in.

In reality, there are some straightforward ways for first-timers to start investing. Stocks and shares ISAs give you access to a wide range of options.

However, we understand that choosing a fund for the first time can seem daunting, so we’ve put together three options to help you get started.

 

Thinking about starting investing? Get some more help from our simple guide to investing.

 

It is important to remember that although investments offer the potential for higher returns over the longer term, the value of an investment may fall as well as rise, is not guaranteed and may be worth less than the amount invested.

Although there is no fixed term, you should consider ISA investments to be medium to long term, ideally five years or more.


Comments
Send