This week there has been news of investment scams, which involve con artists setting up fake investment websites to trick people into handing over cash – with the average victim losing more than £45,000.
With savings accounts currently offering rock-bottom interest rates, it’s no wonder that people are turning to investment with the hope of higher returns. However it’s important to be very clear about where you’re putting your money before you part with it.
Of course, the golden rule of investment is that you should only ever invest money that you’re prepared to lose. That’s because you’re never guaranteed a return on investment, and it’s possible that the value of your investment could go down as well as up. In practice though, there are some investment routes that can be considered relatively ‘safe’. When we look at past performance, we can see which investment options have typically offered the most reliable returns.
Fixed interest securities (gilts and bonds)
‘Fixed interest securities’ may not sound particularly glamorous, but they’re a staple of the investment market for a reason. Gilts are issued by the government as a way of raising money from investors, while a corporate bond is issued by a private company for the same reason. The amount that you pay is known as the ‘nominal value’ of the bond. This can increase or decrease according to market value, meaning that you may get back more or less than you put in. However, since you will also be paid interest at regular intervals, these are considered a pretty safe bet – more secure than investing in shares, for instance.
Invest into a stocks and shares ISA
If you have a little more appetite for risk then you might want to consider opening a stocks and shares ISA. These could provide you with more growth over a long-term period, however they are not quite as stable as the option above. You can probably invest through your bank, and typically they will offer a range of ‘automatic’ investment options depending on how cautious you want to be. This means that you don’t have to choose where your money is invested – instead, the bank will automatically invest your money into a range of different stocks and share options. This is a very straightforward investment option, and typically will see your money grow as long as you’re prepared to leave it for several years.
Take expert advice
The safest option is always to speak to an independent financial adviser before making your investment. This is particularly important if you’re considering less traditional investment options. We would suggest that anybody who is about to invest a sizable chunk of money gets advice first. When you’re deciding whether or not to seek advice, consider how much your investment money compares to the size of your savings and the amount you earn. Even a smaller investment could be significant if you’re on a lower income.
When choosing an adviser, check that they are registered with the financial conduct authority (FCA). This will ensure that the advice you get is both legitimate and suitable for your needs.