Easiest Ways to Start Investing

Most of us have a source of income or in other words we earn money from various ways such as working full time, running a business or being self-employed. No matter what the source of income is, there are a number of things to manage from what we earn and the spending’s vary from person to person. However, it is not safe to spend everything you earn for the long run. It is important to save a certain amount from what we earn.

Many of us have a habit of saving for the future or for emergencies and these savings are mostly done by depositing some cash in a bank account. It is the most common and convenient method of saving. Once your savings account has got a fairly good amount in it, it is more profitable to invest that money in various components for a better profit. This is the step most of us do not take due to lack of knowledge and confidence on investments and how profitable they can be.

Investing money is one of the best ways to build wealth over time. It is an opening for you to reach various financial goals. Before you start investing your hard earned money it is important to have a basic knowledge on how to invest your money the right way. There is no common theory to fix everyone’s investment requirements.

It is best for you to have your own investment plan that fit your investment style, budget and your risk tolerance. Certain investments may carry more risk than the others and once you have invested there’s no point regretting or worrying about it. Make sure how long you can spare your saved money on an investment without making use of it. If you are a beginner or a first time investor initialize the following at the beginning,

1. What are your financial goals, timeframe and the risk you can tolerate?

2. Are you planning to manage your investments by yourself or hire someone?

3. Selecting the best investment account

4. Open an account.

5. Choosing the types of investments that you are interested in investing.

Once you have decided on the above mentioned factors look into some of the following investment ideas which are not so complicated for beginners.

Savings accounts with higher interest rates

Many banks have special savings accounts introduced for their customers where they pay a higher interest on your savings than to a regular savings account. This is one of the simplest ways to boost your wealth while still having access for your money any time you need.

Most of these high yield savings accounts can be opened through an online banking app and are ideal if you are saving for a purchase in a couple of years or just holding it for an emergency.

Certificate of deposit

If you want to add some extra interest on your savings this is another easy way to try. Many reputed banks issue Certificate of deposits for various time periods such as six months, one year or even for five years. Once you purchase a certificate you cannot withdraw the money you have invested on it until it matures which means until the time period mentioned in the certificate ends.

If you want to do so the bank will charge a penalty from you. These certificates may hold your money longer than the high yield savings accounts but are also another easy and safe way of investing.

Retirement Plans or Pension

Another simple way to start investing is going for a retirement or pension plan that most of the employers will offer to a portion of what you agree to save for your retirement from your salary each month. The money will be invested in different ranges of assets, such as stocks and bonds.

This is a great way to save or invest your money tax free and once you select a plan the money will start saving automatically. However, these are long term investments and most of the pension schemes do not allow you to access the money until you are 55.

Investment Platforms

This is one of the easiest and cheapest ways to invest. From an investment platform you can buy or sell shares and funds. Their websites or apps will provide all necessary information on the investment process. There are several kinds of fees involved when using these platforms and it is important to know a clear idea on how much you will be charged. Always go for a low cost investment platform with good customer care service.

By purchasing shares, you own little pieces of a large company. You can either buy shares from different companies or shares from the same company. Value of the shares goes up when the companies are performing well. By selling your share when the value goes up makes a good profit. Sometimes you may receive a portion of the profit these companies are making as dividends. Most of the UK largest companies’ shares are listed at an index called FTSE 100. However, if the companies you have purchased the shares from do not perform well it will be a loss for you.

Bonds

By purchasing bonds, you lend money to a company or country. A set amount will be paid at the end of the given period or when the bond matured. There are regular interest payments for these bonds called coupons.

Mutual Funds

Investing your money in a mutual fund means instead of investing in an individual share you are joining a group of shares. You may not be able to do it by yourself alone so it can easily be done through a fund manager. These fund managers may invest your money in other assets like bonds too. There is a fee for fund managers.

ETF

Exchange Traded Fund let you invest in more than one company listed in FTSE 100 or S&P 500. ETF’s get traded on the stock exchange. It is a very popular investment due to the low cost involved.

Property

As property prices keep increasing it is a good choice to invest your money either in residential property investments or commercial property investments. You can purchase an investment trust so that a manager will invest your money in a number of properties.

Precious Metals

Money can be invested in other assets like gold and silver and it is an easy way to diversify your investments. Sometimes when the stock market falls the prices of these precious metals increase so that you will not lose. Investing in precious metals can be done through purchasing investment funds that are specialized in this sector.

Investing builds an individual’s purchasing power or savings which in the long run will help with the most common financial goals like retirement or wealth building. Saving money in general savings accounts will pay a little interest compared to the other investments available and most probably the inflation will decrease the value of the money in the savings. By investing your saved money in stocks and bonds will let your cash cope up with inflation.

Nowadays with the help of the latest technology many online brokers are available to take care of your investments and the good news is they do not have a minimum amount to invest meaning even with very little money you can start investing. As a beginner you can even hire a robot advisor that will use an algorithm to automatically select and manage a variety of funds that matches your requirements.

We hope and believe that reading this blog gave you a clear idea on how to start investing easily? Also if you are looking to send money to Sri Lanka from UK, always remember our exchange rates is the best in UK market.