Financial Adviser Hertfordshire

Investments - Long Term

Investments are anything into which money is invested other than a bank or building society account.  In general investments are where people place money that is no likely to be immediatly required and where they expect to get a better return than is provided by bank and building society accounts.  It is also where people place money from which they require an income but also want some growth.

Over the long-term Inflation is the enemy of your money since it eats away at the real spending power.  In the short term the effect is negligable but over the long term the effect can be devastating.

It is generally accepted that over the long-term, it is unlikely that bank and building society deposits will keep pace with inflation.  If the interest is taken as income then this is almost certain.

Bank and building societies are classed as low-risk.  It is highly unlikey that capital value will be lost (except to inflation).

There are some investments that are marketed as low-risk but with the propect of inflation beating growth and or income without risk.  Beware.  In our experience most of these are either not low-risk at all (For example the capital shares of split capital investment trusts or they almost always fail over the long-term to deliver inflation beating returns.  Most offerrings are just marketing gimicks and are best avoided.

The investments that are most likely to provide inflation beating returns, including those that pay income are medium-risk investments.  These investments do not guarantee either the return of capital.  Care is therefore vital.  You must choose the right medium-risk investment  and if you do not have the necessary knowledge and experience we recommend you consult an Indepenent Financial Adviser (IFA).  Your IFA will help you to invest well, so reducing (though not eliminating) the risk whilst increasing the likley returns.

There are risks involved in all investing. The skill of investing is knowing which risks are worth taking, and which should be avoided. Finding and knowing which risks to take is the essence of good investing this cannot be done without careful research and analysis. You must give yourself every chance to make the right decision. Investing without carrying out sufficient research is like playing roulette. You are giving yourself virtually no chance of covering your investments and avoiding disaster.  If in doubt take independent financial advice.

A good independent financial adviser will tell you that apart from cash, there are really only really very few fundemental places to invest.  These are : Bonds (Loan stock), Shares (Equities), property, commodities and currencies.  Many derivatives of these are available which can confuse the fundementals.  A good IFA will keep focused on the fundementals whilst taking advantage of the benefits that derivatives offer.

Do not buy individual shares yourself.  The potential gain does not justify the risks inherant with any one share.  To spread your risk you need to by many shares but many share are much harder to monitor and manage.  Share investment might be a fun hobby but very very few investors have the dedication, skill, experience and access to information to be successful over the long-term.  You will meet some who have tried and some who claim to be quite successful but there are many who have come badly unstuck and lost substantially.

You might wish to try your hand at higher risk investment.  This is not recommended unless you accept the risk of substantial loss.  Some believe the more risk you take the more the reward and certainly some high-risk investments do very well but you must be prepared to lose also.  With high-risk investment it is even more important to have good independent financial advice.