The smarter way to invest

With savings still underperforming many are turning to investments to get a good yield on their money. Read on for some tips to help make sure you make the most of the opportunities out there.

Maybe more than ever before it’s vital to make your money work for you, which is why it’s a perfect time to think about investments. 

While returns on savings are coming under pressure from low interest rates, inflation is still making things more expensive. There is still good money to be made from smart investing – which leads to the big question: how do you keep your investments smart?

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Well the first thing you have to remember about any investment is that there is an element of risk involved. Regardless of what anyone says, there really are no sure bets so be under no illusions – when you invest your money you will be taking on a little bit of risk. You’ll have to balance this up against the rewards that are available.

Still interested? Then read on for a guide to making smarter investments. 

Plan for success

The most important step you take on your road into investing is that of planning. Realising what you want from your investments is absolutely key to making smart decisions in the investment market. Take some time to evaluate some of the following questions:

• What are your goals? What do you want from your investment? Take some time to think about the financial aspirations that you are saving towards and what your timeframes are for achieving them. Be realistic though – it is important to go into any investment with your eyes open.
• What’s your comfort zone? As we touched on a little earlier, investments carry a little risk but each carries a different level. The basic rule of thumb is the lower the risk, the lower the return so make sure you are comfortable with any investment you make. And if you decide to chase the big scores, be prepared to risk losing the money you put in.
• What type of investment will fit in your comfort zone? This is the big question, and one which will depend very much on your own circumstances. There is a dizzying array of investment opportunities out there, from traditional share dealing to the slightly more unusual. Research the options available to you and measure them up against your goals before deciding if they are right for you.
• Would you feel more comfortable getting some advice? It’s perfectly possible to enter the world of investments independently and the benefits of doing so are clear as you will be able to preserve your profits. However, it can be a complicated landscape and good advice can more than repay itself. If you feel like you’d benefit from a little help ensure that you go somewhere reputable for advice on your investments. This is one thing you don’t want to take a risk on.

Our top five investment tips

After you’ve asked those questions of yourself you’ll be in a much better place to start making effective investments. As you plan and then launch yourself into the investment market there are a few more useful pieces of advice that can help to maximize your returns and keep you away from potential pitfalls. Here are our top five:

• Keep an emergency fund: If you want to be a smart investor cover yourself against unforeseen events that can give your finances a real knock. Events such as unemployment and illness can seriously threaten your financial security so keep a selection of investments that you can tap quickly and easily.
• Check the news: New developments in the investment market could affect your investment choices. Keep on top of them by regularly checking up on relevant news sites that cover the investment market.
• Clear the decks: If you have any outstanding debts try to clear them before launching into an investment strategy. High-interest credit cards will often charge you more than you could hope to make from your investments so work on clearing those debts before you begin investing. Otherwise, any profits that you make from your investments could be quickly swallowed up.
• Diversify your investments: The old adage “don’t put all your eggs into one basket” could have been written about investment portfolios. Keep a balanced portfolio, mixing up different shares and investments. This will give you a little more freedom to take risks as you can maintain a level of safety in other investments. And remember to periodically rebalance your portfolio to ensure you are not over-reliant on any one stock or fund.
• Ask questions: As with almost anything where money is involved there are always rogue agents out there who are looking to scam you out of your money. The best way to combat these unscrupulous characters is to get informed. First off, familiarise yourself with some of the common types of investment fraud. Next, remember to interrogate any investment opportunity you are presented with. If something sounds too good to be true then question it – more often than not it is exactly that.

Are you planning on making some investments? What are your plans?