While the coronavirus pandemic may have had a huge socio-economic impact across the globe, it’s fair to say that Brits were already struggling to create and manage disposable income levels.
In fact, a recent study has shown that 43% of our disposable income is spent within 24 hours of payday, making it increasingly difficult for individuals to save or invest capital as a way of accumulating wealth.
In this post, we’ll offer some advice on how you can invest your money in the current climate, according to your underlying goals and existing budget.
Investing vs Saving – Everything you Need to Know
There’s a fundamental difference between saving and investing, as while the former encourages you to put money aside for a specific financial objective, the latter involves committing your funds in a way to create a tangible increase in value.
Below, we’ve considered how this distinction will affect your mindset depending on whether you have short, medium or long-term financial goals, with a few ideas to keep in mind!
Short Term Goals
To start with, let’s say that you’re saving for a holiday or a wedding, which can be big-ticket purchases that require you to draw from a lump sum of cash.
In these instances, saving is often a preferable option to investing from a risk-reward perspective, not least because you can use safe and high-interest accounts to store your wealth while accruing incremental returns over time.
If you do have a larger source of capital at the outset, you could expand your portfolio to include currency assets and forex trading.
Make no mistake; you can use a forex demo account to gain practical market experience and hone your trading skills, while pursuing short-term gains that enable you to achieve your objectives.
Medium Term Goals
Of course, you may have more costly and medium term objectives such as saving a deposit for a house or your kid’s future tuition.
As these objectives are slightly more ambitious, you may want to consider relatively low-risk investment options such as premium bonds or dividend share investment. These can deliver relatively modest but regular (and reliable) returns over time, enabling you to manage expectations and scale your capital accordingly.
Once again, those of you with a lump sum to invest could also consider purchasing real estate or backing emerging business startups, either through venture capital or a crowd-funding platform.
Such endeavours can deliver significant returns in the medium term, while also providing a secure store of wealth in the form of property equity and stocks.
Long Term Goals
As you grow older, you may want to invest as a way of securing future financial security and creating a lucrative private pension plan.
This automatically increases a higher level of risk, which is why it’s so important that you choose a viable investment vehicle that suits your outlook and capital holding.
Stock trading offers a viable option from a general perspective, with emerging mid-cap shares providing huge growth potential and increased profitability over a period of 10 years or more. Once again, real estate is also a good bet in these circumstances, while you could even look to create a flexible property portfolio to develop a long-term revenue stream.