Investing is something we have been considering more as we are now in our 30s and want to prepare financially for our future and retirement. We have a savings builder bank account that offers a great interest rate on the first £10,000 saved, but once we hit this limit we will be shopping around to see where we can invest our money to hopefully get even better returns.
In this blog post I will take a look at some easy ways to start investing, especially for beginners like us.
What is investing?
Firstly it’s important to address exactly what investing is. Saving and investing is not the same thing, although many people do use the terms interchangeably.
Saving money is usually risk-free as you set aside a certain amount of cash and add to this over time to ‘save’ money. Banks will pay interest on savings, but it is a very small amount. Regular savings accounts are usually seen as a short term savings solution and are great if you are saving for Christmas or a holiday.
Investing is different. The aim of investing is to get greater returns than regular savings interest. It’s a way to build wealth for many people. You will buy an asset when investing, such as property or stocks. Investing is better as a long-term commitment and it’s not risk-free as the value of property or shares could decrease over time rather than increase.
Easy ways to start investing
Though investing can sound a little confusing to those of us who are beginners and a little scary as it’s not risk-free, there are a lot of ways it’s made really simple and straightforward nowadays. You don’t need to be an expert at the stock market to be able to invest. In fact, we can all start investing from the comfort of our own sofas thanks to the internet and mobile apps.
Here are some easy ways to start investing:
You can currently (2019/20) invest up to £20,000 per year into an Investment ISA (also known as a Stocks and Shares ISA). Your money is invested on your behalf in a large range of assets from property to stocks and shares.
It’s really easy to manage your Investment ISAs with companies like Scottish Friendly who even have a dedicated app so you can manage your investments on the go. You can start investing from as little as £10 per month.
They have several ISAs to choose from including one called ‘My Easy Choice’ which guarantees to pay back as much as you’ve invested on your ten year anniversary, providing you’ve not made any switches or withdrawals. If you’re looking for a low-risk investment as a beginner then this sounds like a great choice and one that I expect me and Ben will be signing up to once we’ve maxed our savings builder.
If the company you work for is listed on the stock market then you may be able to take part in a Sharesave scheme or SAYE (Save As You Earn).
The company will offer its employees to buy shares at a future date at a fixed price. The employee can then save a set amount each month straight from their wages into the Sharesave scheme for either three or five years.
After three or five years the employee can choose to buy the shares with these savings at the original guaranteed share price or the employee can choose to take the cash lump sum.
If the share price has risen a great deal in those three or five years then it’s a great way for the employee to instantly make a profit should they choose to buy the shares at the fixed price and sell them right away. It’s also low-risk as you don’t actually buy the shares until the end of the savings period and buying them is optional. If the share price has dropped considerably then you can simply choose to take the money and not invest in the shares.
We have completed two Sharesave schemes with my husband’s employer which enabled us to make an instant profit on the first scheme, but on the second scheme we took the cash as the share prices had fallen.
Another investment we are considering is to buy a second property to rent out. Not only will the rental income give us returns on our investment, but the property value itself should increase over time. We’ve lived in our current property for five years and it’s increased in value by at least £60,000. Property is a great long-term investment with potentially very high returns.
Of course this is only an easy investment opportunity if you have enough money to invest in a second property. We don’t currently, but it’s definitely an aim for the future and a great incentive for us to save as much as possible to make this investment opportunity a reality one day.
Don’t forget that buying and owning a home is also a great investment. The value of housing rises faster than inflation so not only are you providing yourself with somewhere to live, but you are investing in your future and increasing your wealth.
Please do remember that investments are not risk-free. Stock market investments and property can go down in value as well as up, so you may get back less than you pay in.