Investment And You: How You Can Make Your Money Work

Investment isn’t for everyone. However, if you can get into it it’s probably the single best thing you can do with your money. Essentially, you’re making your money work for you. You’re putting it to work. It’s more important than ever now that the banks are paying a pittance in interest. Especially since coronavirus because interest rates have depleted even more.

Unfortunately, a lot of people aren’t in the position to invest. Especially this year with so many businesses going bust or making redundancies. The trick is to know how much you can invest and remember, what’s invested shouldn’t be pulled back out. At least for a few years. Otherwise you’re not going to make any money on it and in the worst-case scenario. Investment advice is also quite tetchy. This is usually because it’s never a cert. In most cases, only you care about the money as it’s yours. Most people don’t, no matter what they say. So whatever advice you listen to, make sure you do your own research to supplement it otherwise you could end up making a mistake or two which cost you. Here are some top tips to help you up onto the investment ladder! Good luck.

Try To Invest In What You Know

This is easier said than done. But if you invest in your passion, you’ll know a whole lot more about the industry and be able to make better-informed decisions. If you enjoy something which has a lot of money running through it, the likelihood is that there is an opportunity for investment. Look at the football industry…for example, over the last 20 years clubs have invested huge amounts into their clubs like: PSG – €1.55bn, and Real Madrid with 2.14.

With such sums in the game, you’d need to find a fund to invest in such as the LF Lindsell Train equity fund. Art is another key example. If you know art, you can invest in it. If you don’t, its a bit of a hit and miss. If you know a piece will go up in value then there’s no harm in purchasing…in the meantime making your home look nice. Always gear to what you know to get the best out of your investments, but never fall back on your own knowledge without doing some research. A lot of people think they know best, but you’d be doing yourself a disservice if you don’t take the time to go over some of the fundamentals.

Have Savings Too

Investments shouldn’t replace savings. You should have savings too as well as key investments. This is because if something goes wrong in life, you need to be able to have some money. Just look at this year and the number of people who were put out of work due to Coronavirus. Having some savings can tide them over until they get a new job. Or it can pay for car repairs or house repairs.

Try to save up a few months worth of bills and expenditure before diverting money which was going into your savings account into your investment accounts. The savings differ per person because each person of course has different outgoings. What one might be comfortable having will be a little too low for someone else, or a little too high. Remember, money, at the moment, can be quite useless in a savings account if you’re looking for interest to accrue. There are tonnes of saving plans out there to help you if you’re struggling with managing to get a comfortable saving barrier.

If you’re struggling with this then you may want to significantly cut down on your outgoings to ensure you have money to save. This is easier for some than others. Start with the easy stuff. Unused gym memberships, Netflix, etc. It may not seem like much but these all added up can make quite a difference and you could save the difference instead. 

Bonds For Safety

Bonds are a great investment vehicle for those new to investments and are willing to hold their investments for a predetermined term. This means you can’t access your money during the investment period or you’ll lose out on something. Usually, any gain and you might even have to pay a small fee.

Bonds come in all different shapes and sizes. If you’re super conservative, you want a low duration government bond. You’ll get your return shortly, and you know the government isn’t about to fail. The caveat here is that if you’re investing in a foreign government you need to ensure that it is doing well and not about to fail anytime soon. Don’t be lured in by any kind of high return promises or anything of the like especially if it’s in a country where there is civil strife or civil war. The returns might be good but they’ll be worthless if the government defaults on what it owes you. It can happen.

Corporate bonds usually pay out at a better rate, however, they are more dangerous. Look how many companies failed this year due to covid. You can’t predict what’s going to happen of course, especially something like covid, but you can make an informed decision and do your research to ensure the business is doing well. Look at the 10k for a start and move your research onwards from there.

Go For Gold

Gold can be a great investment if you buy at the right time. It usually rises in value when there’s some kind of global issue which threatens currency or banking. Again, something like the coronavirus, war, etc., can push the value of gold skyward. It’s always held its value so it’s brilliant if there’s a threat to a currency and you’re worried about high levels of sudden inflation. You need to be willing to hold long term in some cases though because if a lot of people buy gold the value will gradually decline.

There’s nothing wrong with this as long as you bought when it was high. Then you wait until it’s high again, thus protecting your initial investment, or you wait longer and take the profit too. This can be repeated on other metals such as silver or platinum. The issues with these, is that while they usually follow the price of gold, there can be some sudden fluctuations. Be careful when venturing beyond gold in this field as you can get stung if you aren’t on the ball and know what you’re doing.

Stock Market

A great method of investment, but one which needs to be done carefully. You can hit this from two angles. You can either trade manually, yourself. Or you can invest in a fund. A fund is a managed investment portfolio. It’s likely your bank has some of these. For beginners, and people who are passive, a fund is the best chance you’ve got.

Investing manually, or day trading, can be particularly difficult and time-consuming. Also very stressful and can become demoralising so make sure that you get it right. You need to pick a broker, ensure they’re above board, plan your attack, read the news, look at past performance etc. It isn’t easy whatsoever. Not just that, it’s dangerous.

If you’re going long term it’s less stressful and a bit easier but if that’s the case you might as well go into a fund. Funds come in all shapes or sizes but usually you can choose a risk level. The higher the risk level, the more chance there is of losing money. The higher the risk usually means more investment in stocks and less in bonds etc. The closer to retirement you are the more safe you should be, is the general rule of thumb. If getting into the stock market seems viable for you, approach with care and due diligence at all times.

Forex

Forex trading is similar to stock trading in that it is incredibly risky. Think about when you exchange your currency. You get an exchange rate. The game is to buy, and then sell at a better rate improving your initial investment. This isn’t easy and requires a whole lot of practice in demo accounts and reading books. Even then, it’ll take you a long time to get to grips.

Be careful because there are a lot of scam courses out there interested in nothing more than making money out of you. So don’t fall for them. Always do your research before signing up to any kind of get rich quick schemes. Usually, people favour a kind of exchange pairing. This being euro and dollar, or pound and euro, etc. once you observe the fluctuations for long enough you’ll know how they act and behave. Again, this is another active sort of investment. It isn’t something that’s easy in the least and probably the hardest kind of investment to get into. Even people who do this full-time struggle. Be careful and consider other areas first if you already have a full-time job.