Discover the basics of investing, from stocks and shares to alternative investments. Learn how investing could help grow your savings, understand the risks involved, and find the right investment strategy to potentially achieve your financial goals.
At its simplest, an investment is when you buy something with the hope of it increasing in value. It might be a house, a car, stocks and shares, or even art or jewellery – all these things can be referred to as an investment.
Investing could be valuable because it may help your savings grow faster than leaving them in a standard savings account. Over time, inflation can erode the value of cash, so investing offers the potential for returns that keep pace with or even outstrip the cost of living. Investing always carries some level of risk – the value of an investment can go down as well as up and is not guaranteed.
Many people in the UK are already investors, even if they don’t realise it, through workplace pensions or similar schemes. That means it’s important to understand how investing works and whether further investment could help you potentially reach your financial goals.
Stocks and shares are one of the most well-known types of investment. These terms are used to describe units of ownership in a company, which is why they’re also called ‘equities’.
When you buy shares, you’re essentially buying a piece of that company, and your investment’s value will rise or fall depending on how the company performs.
There are two main ways to make money from shares:
Like any investment, stocks and shares come with risks. A company’s value can drop, meaning you may have to sell at a loss. Similarly, dividends are not guaranteed and depend on a company’s financial performance.
Investing isn’t limited to stocks and shares. There are many other options available, each with its own risks and rewards.
Here are some of the common types of investments:
Alternative investments, such as property, private equity, and commodities, may suit different investors depending on their needs. It’s important to remember that investments that promise the highest returns also typically carry the highest risks. A financial adviser can help you understand these risks and invest according to your needs.
Every investment has its pros and cons, so it’s essential to choose assets that align with your financial goals, investment timeline, and your willingness and ability to accept risk. For example, are you saving for a long-term goal such as retirement, or do you need the flexibility to access your money in the short term? Your objectives will help guide your investment choices.
At Schroders Personal Wealth we aim to take the guesswork out of investing. Our experienced financial advisers are dedicated to providing personalised investment advice tailored to your unique goals and risk tolerance. All meetings with our financial advisers, up to and including the presentation of your financial plan, are free and there is no financial commitment required until you decide to take up any of our recommendations.
Before you begin investing, it’s important to ask yourself a few key questions:
You don’t always need to start with a large sum; it’s all about what you feel comfortable committing. A financial adviser can help you answer these questions and create an investment plan tailored to your needs.
This article is for information purposes only. It is not intended as investment advice.
Fees and charges apply.
Cash savings and investments are protected to the value of £85,000 per person per institution by the Financial Services Compensation Scheme (FSCS). However the value of investments may fall as well as rise.
