Investing can take many different forms, whether it’s buying assets that will rise in value over time, or investing in stocks and shares. Simply put, investing is the act of buying shares or assets that will increase in value over time. Buying crypto-currency, for example, is investing in an asset. But the main thing to decide before you start investing is what you want your investment to do for you and what level of risk you are prepared to take. Having a goal to work towards can help you decide.
Many people start investing because, while bank accounts offer some level of interest, the interest may not rise in line with inflation. This means that over time, the money in the account loses spending power.
For example, you have £100 in an account and a cheap weekly shop could cost £20. So with that £100, you could get 5 weekly shops. Your account has 1% interest annually, and so at the end of your first year you have £101. However, inflation is 2%, so the cost of your weekly shop is now £20.40. At the end of this year, you can no longer buy 5 weekly shops, as the cost of the shopping has risen more than the interest on your savings account.
In this situation, investing your money could see you get a better return, and so you keep the spending power of your money. However, investing can be riskier than simply leaving your money in a bank account. This is because investing in a company, product or property means that your own money could be lost if there is a change in the market or many other reasons.
There are many types of investing, from shares to bank products, and each has their own risks and advantages. Which type of investing you want to get involved in is completely up to you.
Stocks and Shares
The stock market is essentially just a supermarket for buying and selling stocks and shares. The shares you are buying are essentially very small percentages of a company. From there, depending on how well the company performs, the value of your shares will either increase or decrease. You can then choose to sell your shares to other people if you want, or keep your shares for a longer time to hopefully let them increase in value.
Trading in stocks is risky, there is never a guarantee that you will make money. There are ways to try to make it less risky, but there is a chance you could lose all the money you invest. If you do not have the money to risk, it may not be a good idea for you to invest in shares. But, if you still want to invest in stocks and shares, there are lots of websites and blogs which tell you how to get started. As with any kind of investing, it’s all about researching your options, and making educated decisions.
Cryptocurrency can be a very risky investment. It’s not uncommon for various coins to drop dramatically overnight. So, the first thing to think about is whether you can afford to lose the money you will be investing. In the past, there have been massive booms in cryptocurrency, with major coins such as bitcoin being worth 10s of thousands of pounds. However, there is no guarantee that there will be any big leaps in value in the future.
If you are interested in investing in cryptocurrency, it’s all about doing the research. There are lots of blogs that offer lots of information on the current market, so it is possible to learn about the market fairly quickly. So, while there are hundreds of coins available, knowing which one to invest in can be a very difficult task.
There are a few different platforms that are used for trading cryptocurrency. Each one has different pros and cons, such as various fees, or ease of use. Again, it’s about doing your research and making sure you understand what you’re getting into.
Over the last few years, investing in property has been seen as a safer bet than other options. House prices have been steadily rising through the decades, with average house prices rising by 207% from 1999 to 2019. With property prices showing no signs of slowing down, many see property as a safer investment. However, there is no guarantee that property prices will continue to rise. There is every chance that external factors could make the prices drop dramatically. Additionally, with the massive upfront costs when buying property, it may not be possible for the majority of people to invest.
There is also an argument to be made that land itself could be seen as a major investment. It would be cheaper to buy a plot of land compared to a house, and land prices are increasing steadily at the moment too. Predictions show that within 20 years, the land could make up to 80% of the value of a property. This is a massive amount, showing that the land could become increasingly valuable until it’s not possible to buy anymore.
Investing in assets can take many different forms. It can vary from buying old cars, rare video games, antiques and many more items. The theory behind investing in assets is that the rarer an item is, the greater value it will hold. A massive part of investing in these kinds of assets is also the condition. As items age, most take knocks, are broken or just completely thrown away. So finding a high quality older item can be very difficult. For example, a Jaguar E-type was £2,089 in 1961, or around £45,000 today with inflation. However, a Jaguar E-type in excellent condition could sell for over £200,000.
But, just because an item is old and rare does not mean it is worth a lot of money. Some items are much more collectable than others, so make sure you research what items to invest in. Another thing to consider, this is not a short term plan. It would be a case of buying the item and letting it sit for a while to allow it grow in value. Or in some cases you may be able to find a bargain if you’re very lucky.
Investing suggests buying an item and holding on to it for a period of time in the hope it goes up in value. Dealing is more short term and usually involves buying an item at a low enough price so it can be sold at a profit quickly. It can also involve a degree of improvement to the item you are buying to increase the value.
For example, dealing in Pokémon cards is largely reliant on buying and selling at the right price to generate profit. Maybe buying a job lot and splitting the lot into single items to sell at an overall higher price. Dealing in cars may involve some repairs or valeting to maximise the profit
So, investing, or dealing can be a very good way to make money and make your money work for you. However, it can require a lot of attention, research and time. So, before you start investing you will have to decide if you have the time, money, patience and are up for the risk involved. It is also a good idea to discuss with close friends and family to get their opinion before diving in head first.
Promise Money is a broker not a lender. Therefore we offer lenders representing the whole of market for mortgages, secured loans, bridging finance, commercial mortgages and development finance. These loans are secured on property and subject to the borrowers status.
More than 50% of borrowers receive offers better than our representative examples
The %APR rate you will be offered is dependent on your personal circumstances.
Mortgages and Remortgages
Borrow £270,000 over 300 months at 7.1% APRC representative at a fixed rate of 4.79% for 60 months at £1,539.39 per month and thereafter 240 instalments of £2050.55 at 8.49% or the lender’s current variable rate at the time. The total charge for credit is £317,807.66 which includes £2,500 advice / processing fees and £125 application fee. Total repayable £587,807.66
Secured / Second Charge Loans
Borrow £62,000 over 180 months at 9.9% APRC representative at a fixed rate of 7.85% for 60 months at £622.09 per month and thereafter 120 instalments of £667.54 at 9.49% or the lender’s current variable rate at the time. The total charge for credit is £55,730.20 which includes £2,660 advice / processing fees and £125 application fee. Total repayable £117,730.20
Annual Interest Rate (fixed) is 49.7% p.a. with a Representative 49.7% APR, based on borrowing £5,000 and repaying this over 36 monthly repayments. Monthly repayment is £243.57 with a total amount repayable of £8,768.52 which includes the total interest repayable of £3,768.52.
THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME
REPAYING YOUR DEBTS OVER A LONGER PERIOD CAN REDUCE YOUR PAYMENTS BUT COULD INCREASE THE TOTAL INTEREST YOU PAY. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT.
Promise Money is a trading style of Promise Solutions Ltd – Company number 04822774Promise Solutions, Fullard House, Neachells Lane, Wolverhampton, WV11 3QG
Authorised and regulated by the Financial Conduct Authority – Number 681423The Financial Conduct Authority does not regulate some forms of commercial / buy-to-let mortgages
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