There is always a dilemma when one is thinking about where to invest their money. The individual finds themselves with a considerable stake of cash but they have a hard time deciding whether to go on a holiday, put in a savings account, apply for a pension or get a performing investment fund that will enable you to get a good return on your investment in the long term.
Investing Money in the UK
One thing that a potential investor should have in mind is that when thinking of investing you should be thinking from a long-term perspective rather than a short term, long term is anything from one year too if you want to hold the investment.
When investing, you should select an investment that trumps the interest offered by your bank, this way you will not be exposing your hard-earned money to an investment that will put your cash at risk with little to no chance of repayment if the firm goes bust.
That is why one needs to do a major research on the investment vehicle they intend to invest in and also do a background check and be thorough at that because that is where your cash will be exposed to.
Apart from that, you should constantly track the major events or economic changes that may hinder your investment performance.
The fact that you have an investment firm taking care of your investment does not mean that your responsibility as an investor has come to a halt, at that moment is when you should be more focused because at the end of the day that is your money on the line.
The other thing to consider is diversification; you should always spread your investment over a wide range of asset classes.
By casting your net widely, you are doing two very important things that every trader should be doing, and that is spreading your risk and maximizing your return potential.
The more products you add to your investment portfolio the easier it is for you to protect your investment in the long term.
There are very many investment products in the market, and some have an inverse relationship to each other and having both gives you a chance to hedge against risk from one asset class that is underperforming.
With this information in mind it is time to start considering your investments; in the United Kingdom, there is an affinity for an investor to go for the property market and this affinity is well founded because the property market in the United Kingdom has been performing very well over the years.
The other asset class bonds and the last investment vehicle is equities or what people popularly known as stocks or share investing.
Investing Money in Property
There were fears of how the property market in the United Kingdom would fair after the housing crisis that shook the world to its core in 2008 and 2009.
The property market in the United Kingdom took a beating from that crisis, and it dropped by 44% the worst ever drop in the UK property market since it began.
This was enough to scare people away, but that was the opportunity that many informed investors would go for.
Anyone who went in and bought property or invested in a property fund at the moment they can clearly tell you that they have made a 100% return on investment or even more.
As an investor, you should always look to go for a cheap investment especially when people are afraid to take a dip into it that is the best time to invest because you will be acquiring the investment at a discount.
There are two ways that you can invest in the property market; you can invest in firms that invest in a portfolio of property shares, or you can invest directly in the property market by putting your cash up in investment firms that have property or develop the property.
There are that high reward commercial property funds that have several office buildings, malls, student hostels, and other property where they get a consistent flow of income through the rent they collect monthly or from the lease agreements they have signed with their tenants.
Investing Money in Bonds
Bonds are one the best bets for an investor as a safe haven investment. They are issued by organizations and governments in a bid to raise money for their operations.
The issuer offers the bond with an interest rate attached to it paid by the buyer for the duration until the bond matures and the buyer receives their money back in full.
There is a catch while investing in bonds; the buyer may lose their investment in entirety. There are things to check out for a while investing in bonds; you should check out for the government’s stance on interest rates if the government raises interest rates that mean the capital price will fall and the yield will in turn rise, and that will affect the interest rate paid on the bond.
This will make your investment rather uneventful. If the interest rates are maintained at the lows or at their levels, then you can expect a proper return on investment when the bond matures.
Investing Money in Equities
Investing money in the UK in equities should be well guided and deciding where to invest your money in the stock market can be confusing, because different funds offer different options but in this case, there is a better paying option.
At this point it is important only to focus on funds that invest in equity income funds and the funds you are investing in should have a different approach; you should have a contrarian fund, a fund that focuses on small cap companies and one that focuses on big cap companies.
This will give you a proper and a well-balanced portfolio that will have a higher probability of returns.