Investing – beginner’s guide

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

There are other types of investments available too, including:

  • Foreign currency
  • Collectibles, such as art and antiques
  • Commodities like oil, coffee, corn, rubber or gold
  • Contracts for difference, where you bet on shares gaining or losing value

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 – more on this later.

When should you start investing?

If you’ve got plenty of money in your cash savings account – enough to cover you for at least six months – and you want to see your money grow over the long term, then you should consider investing some of it.

The right savings or investments for you’ll depend on how happy you’re taking risks and on your current finances and future goals.

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