Reasons to invest

While both investing and saving aim to improve your financial well being, investing is more about aiming to accumulate money over the long term, to provide you with some future financial security. Saving, on the other hand, generally means putting money aside for the shorter term, which could be to help pay for a holiday, a special occasion, a child’s education and so on.

In a savings account your money is secure, generally accessible and gives greater certainty about growth. But in exchange for this security, you will normally only receive a modest return which reflects the current rates of interest available.

Investing, on the other hand, has the potential to bring bigger rewards over the longer term as many investments are linked to the movement of the stock market, which could provide a greater return than you could expect from a bank or building society savings account. However, because the value of stocks and shares will go down as well as up, it also carries a greater risk and you may not get the returns you expect. Unlike a bank or building society savings account your capital is not secure and you may get back less money than you originally invested.

Top ten investment tips

Some handy hints about what to consider when investing:

Ask for advice

Probably the most important thing to do is speak to your financial adviser before making any decisions. Even when your investments are all set up and working, it’s still worth reviewing them with your financial adviser – at least once a year

Decide what your attitude to risk is

Different investing methods carry different levels of risk. Generally, the greater the risk, the greater the potential rewards and the greater the risk of losing some or all of your money.

Try to spread your risk

Investments with the greatest risk present the potential for the greatest losses. Generally it follows that the safest investments offer a smaller gain. So, if you’re comfortable with taking some form of risk with investing, it could make sense to balance the amount of risk across your different investments. Your financial adviser will be able to help you with this.

Spread your investment

Splitting your money into several different ‘pots’ might be a good idea. So you might keep one fund for a rainy day that you can dip into if you need to, and another for long-term investments. This should also help you to spread the risk.

Remember to consider inflation

Before investing, always bear in mind that inflation will make a difference to the real value of your money over time. By doing nothing, or if the return on your investment is lower than inflation, the buying power of your money could go down.

Be realistic

You shouldn’t expect fantastic results overnight. Investing requires patience, and consideration of how your money will perform in the long term. You need to remember that the value of an investment can fall as well as rise.

Protect yourself (and your investment) should the worst happen

Nobody wants to think about it, but if you’re going to invest, you must think about what would happen to your money if you died or became seriously ill. Would your investment have to be used for something other than what you intended it for? Your financial adviser will be able to talk through the options with you.

Remember what you’re investing for

Don’t lose sight of what your investment is for, and how much it will cost – e.g. the price of a holiday home or your retirement.

Use the right products for you

Each investment product we offer varies according to how it’s structured and its tax treatment. It really depends on what you want to achieve. Your financial adviser will be able to advise you on the best products for your needs from the range we offer.

Use available tax benefits

Some investment products offer tax benefits that can really make more of your money. The effect of tax depends on your individual circumstances and, along with tax rules, limits may change in the future.