Types of investing
If you are looking to get into investing to make more from your income then make sure you are financially ready to begin. Are you ready to start investing?
There are various types of investments and deciding which one suits you best will help you begin your investing journey clearly. Set some goals, what do you want to get out of this, will you set yourself some rules of when to withdraw money and how you will navigate investing.
Many experts recommend to invest around 10-15% of your post tax annual income to see the greatest return. However, it is best to begin low and work up to this amount when you can.
Types of investing
Cash
Depositing cash into a back or building society where it can accumulate interest. A ISA account can also help you invest as with these accounts you can decided to have a stocks and share ISA. You can choose where to invest your money or allow the bank to invest your money into different stocks.
This form of investing is the most secure and low risk of them all.
Shares
This form of investing is common as people buy and sell shares on the stock market. You can add cash to your trading account and view stocks, choose a company that you believe in and buy a share, essentially making you a shareholder. If the business does well you could receive a profitable return, money coming back to you. At this point you can sell your shares for even more due to the company’s success.
There is no guarantee when investing in stocks because the market can change daily, you have to be willing to risk to see a return. So deciding how much risk you can tolerate and afford is important.
Property
Investing in property is often a safe bet as property prices are always increasing however this is a huge commitment and a long term investment. You will have to pay a large deposit, stamp duty and have back up cash for maintaining the property before it is occupied.
Taking on a property that will need renovation will cost you heavily so you have to be confident in your choices that you will be able to either rent out or sell the property at a profitable price once you are done.
Bonds
These are often called, Fixed interest securities and are offered by the Government or by companies and banks. Bonds are a form of loan or debt which are issued with interest paid in the form of a coupon. Directly from Forbes advisor, Bonds are first sold on to investors and then they will be traded between institutional holders such as, investment funds and corporate pension funds. Here the price of the bond will fall and rise just like shares.
To buy bonds you can go directly to the UK’s debt management office or a trading platform such as, Hargreaves London and AJ Bell.
Bonds are affected by interest rates, market conditions and credit rating reducing the demand for the bond and ultimately lowering the price.
