Savings and Investments
Why are we encouraged to save money? From childhood most of us
are told to put away money to save for the future - perhaps for
something special? Or perhaps to be sure that when we really need
something we have the funds to acquire it, without taking on debt?
Whether you place your money in a piggy bank, or in a multinational
investment house, our aims are broadly the same; to provide for
our future needs, and to protect ourselves against unexpected
causes of expenditure.
When planning your finances, it is important to distinguish the
difference between savings or investment. Savings are generally
funds that you set aside, but can access relatively quickly. These
savings are often for a specific need or purchase, like a holiday
or a new car. The most common way of 'saving' is into a bank account
('deposit' account) where the money can be accessed in an emergency,
and for every £1 you put in, you will get £1 back (short of a
bank collapse!), and possibly some interest.
Investments are designed to be held for a longer term, usually
at least 5 years. You need to be comfortable with tying up this
money for a period of time, and should not consider investments
unless you have some savings in place. Most investments are not
guaranteed to return your money in full, although do offer the
prospect of higher returns than deposit accounts. Returns, risk
and volatility are the factors that will determine a suitable
place for your savings.
Savings and Investment products range from a simple current account,
which allows a small amount of interest, but facilitates regular
payments and withdrawals without detriment to your savings. At
the opposite end of the scale would be company shares, where you
invest money in a company, with the prospect that the company
will prosper and the shares will increase in value over time.
Whilst the benefits are potentially high, the risks are also much
greater.
The value of investments can fall as well
as rise and you may not get
back your original investment, your adviser will be able to explain
risk
in more detail.
Authorised and Regulated by the Financial Services Authority.
Registered in England and Wales No: 0572404 Registered Office Address:
41 Owston Road, Carcroft, Doncaster, DN6 8DA
