Investments give you the opportunity to aim for stronger returns than you’d get simply keeping your cash in a savings account.
In return, you accept an element of risk and the fact that the value of your investment can go down as well as up over time
Cash savings can erode over time
While some people view cash as a safe haven, if you’re saving over the medium or long term there’s a chance that your nest egg can erode in value over time if the interest rate on your account doesn’t keep pace with inflation. So, the buying power of your cash can be reduced.
Investing can help you reach long-term financial goals
Investing is generally thought to be a best vehicle for meeting your long-term financial goals.
There will almost certainly be ups and downs during the duration of any investment, however taking a longer term view means there is plenty of time to ride out any market fluctuations.
You can choose a level of risk you’re comfortable with
The element of risk that comes with investing can seem daunting to would-be investors, but levels of risk vary.
Usually, the more risk you’re willing to take on, the greater the potential returns, so you can choose to be more adventurous in the hope of higher rewards or play it cautious and opt for a lower risk strategy.
There are also ways to help mitigate risk, including diversifying your investments across a range of assets, sectors and geographic locations.
Investing doesn’t have to be as complicated as you might think
Similarly, some people are nervous about investing as they think it’s too complicated and that they need to fully understand the ins and outs of the financial markets before dipping their toes in.
In reality, there are some straightforward ways for first-timers to start investing. Stocks and shares ISAs give you access to a wide range of options.
However, we understand that choosing a fund for the first time can seem daunting, so we’ve put together three options to help you get started.