Saving and investing are fundamental aspects of our individual and household financial planning, but they shouldn’t be confused as they each serve a different purpose.
Saving is usually a regular habit with a particular short term purpose in mind, for example, a holiday, car or deposit on a house.
Under the “saving” umbrella, we should maintain an emergency fund of immediately accessible cash. The government have previously suggested three months net income as a suitable figure, but our experience is that for some this figure is more distant than the moon, whereas for others, its woefully inadequate.
Whilst Einstein was correct, the eighth wonder fails to account for inflation – the annualised increase in the cost of living.
Compound interest is great, but we need to apply a reality check and remember that interest rates on savings are rarely at the same level, or higher than inflation. Therefore most of us shouldn’t hold more in cash than the combined value of our emergency fund and our savings for specific short term (five years or less) purposes.
Before considering investing, it’s important to think about debt. Sensible investment strategies usually reward you with less than the equivalent amount of debt would cost you on things like vehicle finance, credit card interest payments etc. So, before thinking about investing, think about paying down your debt.
When people tell us they want to invest our favourite question is “why?” Why do you want to invest? Perhaps you’re trying to beat inflation, but again “why?”. OK, we know that a diversified investment solution always tends to do much better than cash over the longer term, but, “what are the objectives you’re trying to achieve and how realistic are those goals?”
Deciding where and how to invest is a daunting task and it’s important to remember that there is no one size fits all.
As an IFA (Independent Financial Adviser) we will work with you to understand your life goals and work out a full financial plan that has the right blends suited to you.
Being independent means we work for you and are able to access all the options on the market on your behalf.
We find that every investment is right for some people, but wrong for many others. So whether you are new to investments or want to re-evaluate your existing portfolio, our expert advisers work with you to establish your investment comfort zone and build a personal investment portfolio that reflects your financial goals.
Investing is about making your surplus cash work hard for you to grow and become a source of income and capital for the future. Most people invest in order to generate a good return over a reasonable time frame that might not be achievable through other savings routes.
Setting out your life goals will help determine the right investment route for you to ensure you get there, it’s a little like sailing across an ocean.
We need to understand where we’re starting from, where we want to go, when we want to get there and the advantages and disadvantages of various routes.
As we’re travelling it’s important to regularly check our progress and make tweaks to our route. Don’t worry, that’s where our ‘review and improve’ service kicks in, an integral part of every investment strategy. On most voyages, it’s inevitable that the occasional storm will come along. Don’t worry, depending on your plan, we’ll either help you sail around the worst of it or, we’ll help you batten down the hatches as you head full speed ahead to your destination.
We’ll be at your side throughout.
The Financial Conduct Authority does not regulate advice on deposit accounts. The value of investments and income from them can fluctuate (this may partially be the result of exchange rate fluctuations) and investors may get back less than the amount invested. Past performance is not a guide to future performance. All information is offered in good faith and is believed to be correct at the time of publication however it may be superseded following publication. E. & O. E.
Investment & Retirement Solutions Ltd is authorised and regulated by the Financial Conduct Authority
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