When it comes to preparing your finances for the future, it is never too early. In fact, studies have shown that the earlier you start saving and preparing for our future the better.
Building a savings pot for your future, retirement or your family isn’t something that is out of reach, even a small amount each week or month could help you on your way to building your nest egg. But the question is, what is the best thing to do with you savings once you have started growing your find? Should you leave it to build slowly as and when you add to it? Or should you invest your money and take the risk of potentially growing it your pot?
Savings Account
It can be easy to just let your savings build up in a secured savings account with your bank or building society. Making sure to choose an account that gives you a high-interest rate to help you add to your savings. Choosing a high yield account and look for banks paying as close to the 1.9 per cent APY to get more for your money.
Stocks and Shares
Arguably, people’s first experience with investing their money is with stocks and shares. Many people have grown their wealth by investing this way. That doesn’t mean it is risk-free and will work for everyone. Investments of any kind always come with a risk and it pays to know what they are before you part with any money.
When it comes to stock market investing it pays to do your homework so you are confident you are investing well and are aware of the risks before you go ahead.
Buy a Home
Buying a home is most likely the biggest investment you will ever make. However, you should never use your emergency funds for a down payment, expect your home to make you rich, or buy a home if you have an outstanding debt. Instead, it would be best to seek housing support. Keep in mind that when it comes to investing in a house, the more you have in savings, the better.
Bonds
It can be overwhelming when it comes to investing your money in bonds. But that doesn’t mean you should rule it out altogether. But if you are serious about investing then it is worth having some of your money invested in bonds. This is because it is seen as a safer investment than in stocks. There can be a lot to learn and sift through when it comes to finding the right bond to invest in.
You choose different terms for your bonds, depending on the bond from a few weeks to a lifetime. The return depends on the interest agreed and the risk be ascertained from the rating assigned based on credit. For a lower risk look for an ‘AA’ rating but bear in mind these may come with a lower interest rate.
Physical Commodities
Alternatively, you may want to look at investing your money in commodities such as gold, silver, art, wine or any other items that will hold their value over time. Whilst you may not see a return on your investment over your lifetime, for collectors this can be a great way of indulging your passion and providing a fail-safe should the worst happen. This will mean you can sell your commodities in the future should you need to free up cash. Possibly at a profit depending on the item and the market when you sell.
