Your guide to the Fundamentals of investing
This is a transcript of the Fundamentals of Investing video.
We all have investment goals. But it can be difficult to decide whether you should save or invest to reach them.
Choosing to save usually means putting your money somewhere like a bank, or building society, or even under the bed for something in the short term, like a summer holiday or for a rainy day. Saving in this way is low risk and may pay interest, but your money may not grow much.
If you decide to invest instead, the risk is higher and you could lose some or all of your money, but it may potentially grow more.
The five most common types of investments or asset classes are:
Cash – the money you save in a bank or building society.
Fixed interest – these are often bonds. This involves lending your money to the government or a company who may pay you interest and may eventually repay the loan.
Equities – or company stocks and shares. This has the potential to pay you a share of company profits.
Property – whether commercial or residential, these can be incorporated within a fund.
Alternative Investments – including precious metals and hedge funds.
You can also mix and match these asset classes in an investment portfolio in order to help achieve your goals. This is called diversification.
At Click & Invest, we will create a diversified portfolio for you. This reduces your exposure to the risk of one or more asset classes performing badly.
Despite this, investing can still be risky, so you need to consider how much risk you are comfortable with.
It’s important to understand that the value of your investments can go down as well as up.
So before you invest, you need to consider whether you are in a stable financial position.
We can then recommend an investment strategy that is suitable for you, and may help you reach your investment goals.
Investec Click & Invest. Your Money. Our Expertise.
Investments in the stock market may fall as well as rise and are not appropriate for investing for the short term. You may get back less than you invested. All investment carries risk and it is important you fully understand these risks and are willing to accept them.