Published: 7:15 AM January 6, 2022
I’ve invested all my savings in what I see as safe places, such as banks and secure investments like Premium Bonds, but with interest rates so low, I’m not getting a very good return. I’m secure financially – I have a good income, I’ve built up a decent pension fund and have nearly paid off my mortgage – so I wonder if I should start investing in stocks and shares. What do you think?
Phil Beck of Smith & Pinching responds:
From what you’ve said so far, it sounds like you need a financial plan for your future. It’s hugely important to understand what you want to achieve when you put money aside – is it a comfortable retirement, a second home, helping the children get on the housing ladder or leaving a large estate when you die, for example? Only when you know what your objectives are can you make decisions about where to invest, and how much.
I understand your preference for low-risk savings and investments, but it is important to remember that bank and building society interest rates are still low, and inflation is creeping up. The consequence of the combination of these two factors is that your money will lose value over time in terms of its purchasing power. There are also limits to the protection you have for money held in banks and building societies (the Financial Services Compensation Scheme), currently a maximum of £85,000 per person per UK banking institution.
Investment risk is something we explore with clients every time we review their plans. The amount of risk that is right for you will depend on your circumstances and will undoubtedly change over time. However, an investment portfolio doesn’t have to carry a high level of risk. Different investments have different levels of risk, and it is perfectly possible to hold a relatively cautious portfolio and still achieve inflation-beating returns.
I strongly recommend that you take advice from an Independent Financial Adviser, who has the expertise and experience to help you identify your targets and will show you how those targets can be achieved. This process will involve an extensive and detailed analysis of your circumstances, risk profile, needs, goals and aspirations, which will lead to initial recommendations and an ongoing financial plan that will be reviewed regularly, to ensure you stay on track in the future.
Any opinions expressed do not constitute advice. The value of your investment can go down as well as up and you may get back less than the amount invested. The return at the end of the investment period is not guaranteed and you may get back less than you originally invested.
For more information, please visit www.smith-pinching.co.uk