Investing isn’t as scary as you might think. In fact, the reason why so many people often feel anxious about investing is because they know so little about it.
It may seem like a daunting process, but trust us: investing is pretty simple once you’ve mastered the basics! Here we go…
Why is investing so important?
- It's likely that the interest rates offered by many savings accounts won't keep pace with inflation, meaning over time your purchasing power will decrease. Ultimately, as inflation rises, the value of your money declines.
- Investing can be a great way to give your money the chance to grow over the long-term. The longer you keep your money invested for, the more chance you have of recovering from dips in the market.
Why do people invest?
- Investing can generate potentially higher returns over the long-term, helping people reach their long-term financial goals.
What’s the catch?
- When you invest in the stock market, there’s always going to be risk involved. Your investments can fall in value, and you might not get back the amount you invested.
- Diversification may help reduce this risk. By spreading investments across various funds which invest in a range of asset types such as cash, fixed interest securities, bonds and equities, you can help reduce the risk within your investment portfolio.
How long should I invest for?
- Investing is for the long-term (at least 5 years); so it isn’t suitable if you need quick access to cash.
- Long-term investing also gives you more time to recover from possible losses during dips in the market.
What do I need to consider before I invest?
- Decide the level of risk you’re willing to take – choose a fund that is aligned to your risk appetite, bearing in mind your financial goals.
- Remember, though, that all investments carry risk; your investment could go down and you might not get back the amount you invested.
- Consider your capacity for loss should the stock market take a tumble – would you still be ok financially if you lost all of your investment?
What’s the difference between a cash ISA and stocks and shares ISA?
- Cash ISAs: A cash ISA is similar to a standard savings account but it provides a much more tax efficient way to save because you don’t pay tax on the interest you earn.
- Stocks & shares ISA: A stocks and shares ISA provides you with a tax-efficient way to invest in the stock market. They are structured differently to cash ISAs in that you invest in funds which invest in the stock market.
How much can I invest?
- This tax year (6 April 2017 - 5 April 2018) the ISA limit has increased to £20,000 – which is good news for savers and investors alike.
- This means that an individual can invest a total of £20,000 in either a cash or stocks and shares ISA (or a combination of both) for the tax year 2017/2018.
- And, just like saving, you can either invest a lump sum or a regular amount every month, if you find that more manageable.
How do I know which option is best for me?
- If you’re saving for short-term goals, you may want to consider keeping your money in a standard bank account or cash ISA.
- Investing is for goals you see yourself achieving five, 10, or even 20 years down the line. And those goals, as well as their timeframes, should largely inform which investments you choose.
Take the Zurich Stocks and Shares ISA, for example. It offers a flexible and tax-efficient way to save for long-term goals. We like to keep things as simple as possible, offering access to five funds designed to reflect a range of risk levels. What’s more, trusted ratings and research agency, Financial Express (FE), has recognised the Horizon multi-asset funds for their performance. Four of the five funds were recently awarded the maximum FE Crown Fund Rating of five, which is great considering only the top 10% of funds are awarded five FE Crowns. You need to bear in mind though that FE Crown Fund Ratings do not constitute investment advice offered by FE and should not be used as the sole basis for making any investment decision.
Visit our investment page for more.
The Zurich Stocks and Shares ISA is provided by Sterling ISA Managers Limited, trading as Zurich. Sterling ISA Managers Limited, authorised and regulated by the Financial Conduct Authority. Registered in England and Wales under company number 02395416. Registered Office: The Grange, Bishops Cleeve, Cheltenham, GL52 8XX
The Zurich Horizon Multi-Asset Fund range is provided by Zurich Investment Services (UK) Limited, which is the authorized Corporate Director of the Zurich Investment Funds ICVC and is authorized and regulated by the Financial Conduct Authority. Registered in England and Wales under company number 3383730.