Trying to make sense of the investment industry is no mean feat and it’s widely recommended to get a professional opinion before you make any hasty decisions – this is your hard earned money you are considering investing into a business, person or product after all. Investment specialists spend years gaining and building up their expertise, so it’s wise to take advantage of this in-depth knowledge. In this article we’ll cover some of the basic and more widely used types of investment.
Stocks and shares are a common type of investment covered under the equity umbrella. Equity encompasses a broad range of terms from investment into one company or organisation (high risk) to a fund that represents global markets and thousands of companies, spreading the risk out.
For those individuals interested in secure investments with minimal risk there are a number of national savings products available on the market, so called because the government backs them and uses them as a method of borrowing. These policies tend to offer good tax benefits due to them being backed in this manner too. Some common examples are ISA’s, Fixed Interest National Savings Certificates and Premium Bonds.
There are numerous TV programmes around now that attempt to unravel and clarify the complex nature of this next type of investment – property. Whether it’s landlording, property shares, unit trusts or property development be aware of self-declared gurus out there and too-good-to-be-true deals, if they seem too good to be true they often are! Immensely complicated in nature the booms and consequent busts of the market can mean an innocent investor loses thousands of pounds in an instant.
Our next type of investment to discuss is endowments. These were widely used only a few years ago but in recent times, have been less so as the associated risks with this type of investment have become more apparent. Based on the assumption that the policy provider will experience investment growth they work by the borrower borrowing money on an interest only basis for either a mortgage or loan repayment. The endowment is then taken out to provide life cover for the duration of the loan and offers a lump sum at the end, there was often some additional money left over too which made these worthwhile before the risks became too great.
To conclude, for those looking to make an investment of some description, we strongly advise visiting a professional first so they can match your investment needs with the right policy to suit your situation and means.
For advice on all the above and other financial services including pensions, SIPP’s and bonds you can visit the Financial Planning Partners to chat with an advisor.