Personal Investment - The Basic Options Explained

In these perilous times, the need to invest for the future is more pressing than ever. Pension pots are shrinking, wages are being frozen, and job security is no longer a given. The unpredictable nature of anyone’s life, as well as the economy, makes it hard to plan. The range of options can make it seem overwhelming, but there are simple and tax-effective ways to invest.

Pensions

The first thing to note about a pension is that it is never too early to start. With Employer Contribution pensions and the government-instituted changes to how pensions work, any additional contributions help. Pension funds generally invest in long-term prospects such as property, making for low risk and sustainable returns. The raise in retirement age alongside the dwindling state pension also will make personal pension plans essential.

The Stock Market

This is a rather complex subject for the uninitiated. You may immediately think of buying shares in a certain company like Tesco, which is possible but can result in a case where you have your eggs in one basket. The most prudent method of investing for the future is to use the tax-efficient vehicles like 401(k) plans or an IRA.

Property

Brick and mortar investments are always popular and generally increase in value over the long term. Whether it is ownership of your own home or you are lucky enough to have the spare money such that you can purchase an investment property, property is valuable. However, the value of the property can shift, sometimes dramatically, and land and buildings are hardly liquid assets. In a poor marketplace, you can’t depend on a quick sale.

“Be realistic. Like any investment, a new property isn’t going to produce a large profit for a while and picking the wrong property could be a huge mistake,” advises Chart Westcott, the Co-Founder and Chief Operating Officer at Ikarian Capital, LLC. “Consider consulting a financial advisor. With so much information readily available, they can sort out what is essential and offer advice that is actionable, relevant, and makes you a profit,” says Chart Westcott.

Conclusion

The overriding thing to bear in mind about any investment is that the value can and will change. The reason that you could profit is precisely that of the risk. However, there is no reason not to use any surplus of money to prepare for the future. Even a modest nest egg can be a lifesaver in tough times. The key is to be selective about your investment and also make sure it fits your risk profile, budget, and your anticipated needs. Consulting a financial advisor often won’t cost you, as most investment firms pay the FA commission. Always remember that prudence and preparation are the keys to success.