The thought of taking the first steps on your investment journey can be an exhilarating, frightening one. To some, the move is akin to gambling, and the risk too large to comprehend. For others, who mix their acumen with a little luck, investing can pay off.
Sure, having a savings account might make you feel like a grown up, and in a sense you are investing in your future by regularly paying into one. But if you really really want to stay ahead of your finances, and perhaps even turn your insights and intuition into something lucrative, then it pays to invest. With that sense of daring in mind, here are 5 reasons to start investing today.
TAKE CHARGE OF FINANCIAL SECURITY
As the perenially prescient financial advice website moneysavingexpert points out “over the long run, historically stocks and shares have outperformed money in savings accounts”. While it’s no guarantee that this will always be the case, if you take a simple, calculated look at the numbers involved, free from emotion or distraction, then savings, though more erratic, tend to perform less well than investments.
SAVE FOR RETIREMENT
We keep reading in the news that we must start saving for our retirement now, while we’re still young. Although it seems like a long way off, it’s actually a sensible idea; playing the long game is the secret to many’s financial security, after all. Most us don’t want to start thinking about paying into a pension pot, but if you do, paying for your retirement will be a whole lot easier, especially if you want to live comfortably in your golden years.
According to the Money Advice Service “to have an income of £20,000 a year in retirement, you would need to put aside roughly £250 a month from the age of 25. Wait until you’re 35, and this figure goes up to a little more than £400 a month”. Scary stuff, right? Indeed, in general, we have to rely on our salary to cover our expenses and let’s not get started on the government’s pension schemes; if they had it they’re way we’d be working forever. For a different approach to suring up your finances when you retire, perhaps even allowing you to do so early, consider investing.
Speaking of retiring early….
FOR FIRE
No, don’t invest in wood for fires; that’s literally burning through your profits. Instead, fire stands for ‘Financial Independence, Retire Early’. It’s a movement and a lifestyle choice which has been gaining some traction of late in the press, and we kinda like the sound of it. Saving a major chunk of income from a young age (as high as 70% of your income) can allow one to retire at an earlier age; well, duh. This movement encourages frugal living, extreme saving and smart investment and has seen a lucky few young folk retiring in their mid thirties. Another reason to consider investing, don’t you think?
Some simple hacks to save money every month include:
Auditing your food bill: Food is an essential expense, but are you spending more than you need to be at the supermarket? Start by taking out your last supermarket receipt and doing a critical audit; look at the items that are costing you the most, then consider if these are really essential or if cheaper replacements could be made. This doesn’t need to mean you should cut back on fruit and vegetables, or things that bring you joy, but rather, whether you’re getting the best deal compared to other supermarkets and if the brand you’re loyal to really is giving you value for money.
Negotiating new rates: All too often we pay our utility and other bills as they come in without a second thought, thinking that these rates are fixed and negotiable. However, there is often a degree of wiggle room when it comes to the rates your provider offers you; they want to keep you loyal, after all, and will often shave a few pounds off your bill if you keep on their case.
Enlist peer support: One ideal way to save money is by getting your friends involved and letting them know you’re looking to cut back on your social spending. Of course, you shouldn’t go full hermit-style and isolate yourself; just find some activities which don’t cost the world which you enjoy sharing with friends.
WEALTH PRESERVATION
Remember how we mentioned ‘playing the long game’ a little earlier in the article? Well, we were doing just that when we dropped in that sage advice, ready to return to our point once it had percolated a little.
Indeed, some investment opportunities out there, for instance, gold trading, can work in your favour later down the line owing to its stamina and resilience in even the most volatile markets. Ever wondered why people start buying up gold in times of crisis? Well, gold has been trusted by investors for decades because of its wealth preservation qualities. Should you be looking to play the long game, then invest in an item, product or service you can trust.
Investing in property is also an excellent way to protect your wealth over the years. Real estate investments provide stronger returns than other investment options, offering reliable income and access to property capital gains through property appreciation.
What’s more, property investments are less volatile compared to stocks. When you rent out a property for income, that steady flow of rental income helps shield your investments from market swings. While there will be challenges, like the associated costs and taxes, setting aside additional funds for contingencies can help protect you from any surprises. As with any investment strategy, it’s important to do your research and understand current conditions before making any moves toward property investments.
IT’S NEVER BEEN EASIER
Where once investment insights involved spying over your grandpa’s shoulder as he circled items in the Sunday newspaper with a felt tip, now there’s loads of invaluable advice out there, accessible to all. Yep, investing has been democratised to an extent, with the actual act of investing now as simple as making an Amazon purchase.
You can now invest and find the best brokers from different providers and platforms online and on app-based services like Revolut and Freetrade, who have been disrupting the investment market lately by removing the minimum trading fee which used to be a barrier to entry-level investors. Long may it continue.
There’s also never been easier channels into diversifying your portfolio, simply and strategically. multi-asset brokers such as TradeStation and Saxo have particular expertise in this field.
THE BOTTOM LINE
Investing in anything is a gamble and requires a fair bit of fortune, luck, nous and nuance to get it right. Markets are incredibly volatile right now, and you should seek the advice of a financial expert before committing any money to investing.
*Anything written by IDEAL Magazine is not intended to constitute financial advice. Always consult with an independent financial advisor or expert before making an investment or personal finance decisions.*