LifeFinancial

If your savings goal is more than five years away, putting some of your cash into investments could allow you to earn more from your money and keep up with rising prices. Investments are something you buy or put your money into to get a profitable return. Most people choose from four main types of investment, known as ‘asset classes’:

  • Shares – you buy a stake in a company
  • Cash – the savings you put in a bank or building society account
  • Property – you invest in a physical building, whether commercial or residential
  • Fixed interest securities (also called bonds) – you loan your money to a company or government
  • The various assets owned by an investor are called a portfolio. As a general rule, spreading your money between the different types of asset classes helps lower the risk of your overall portfolio under performing

Returns

Returns are the profit you earn from your investments. Depending on where you put your money it could be paid in a number of different ways:

  • Dividends (from shares)
  • Rent (from properties)
  • Interest (from cash deposits and fixed interest securities)
  •  The difference between the price you pay and the price you sell for – capital gains or losses.

Fees and investment returns

Managing investments takes time and money and service providers will charge a fee.

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