Pros and Cons of Investing Money
Individual financial security can be gained by implementing various safety nets. You can purchase home insurance to cover your property, life insurance to protect your loved ones, and save regularly to build up an emergency fund. But have you considered investing money?
Investing money can be an appealing opportunity for people who are prepared to take some risk with their money in exchange for a higher return. Typically, people will invest their money in property, stocks or fixed interest securities (more commonly known as bonds).
Below we have listed some main pros and cons worth considering before investing your money!
1. Advantages of Investing Money
· Time. Smart investments can see you get more for your money over a longer period of time. It is recommended to invest money for 5 years or more to see a larger return.
· Perfect for retirement plans. Investing money in your early years and leaving it to grow over time can help produce a healthy retirement fund later on in life.
· Savings for your children’s future. It is not uncommon for parents or family members to invest money on behalf of young children. This allows plenty of time for the investment to build as the children grow up. Resulting in a healthy sum of money for them to enjoy when they come into adulthood.
2. Disadvantages
· Uncertainty – investing money comes with an element of risk. Money you place in secure deposits or stocks have the potential to lose value over time because of the interest rate. So you need to prepare to endure a loss.
· Falling stock markets – stock market investments can beat inflation and interest rates over time but there is always a risk of prices being low when you go to sell. When investing in stocks its recommended to use the ‘diversifying’ method whereby you spread the risk across a number of stocks instead of just focusing on one.
Financial Foresight
Ultimately the decision to invest money will be dependent on your own financial situation and saving goals.
If you would like further advice on savings and investment, feel free to get in touch! Book a free, no obligation consultation with Financial Foresight today. We’d be happy to help!
