Why do I Need to Invest?
We all have reasons to save. The holiday of a lifetime, a family wedding, an extension to your home or helping a child to get started on the property ladder. To save you need dedication – after all, saving means giving up today, in order to enjoy the future.
When investing there are few simple questions you need to ask yourself.
- How much risk am I prepared to take?
- What sort of return do I expect?
- How long do I need to invest for?
Generally speaking, the longer the investment term, the more risk you can afford to take and therefore attempt to maximise the return on your investment.
I have a sum of money to invest. What are my options?
- One option is to put your money in the bank or building society. Your capital is secure but, with interest rates so low, the potential for growth is minimised. In some cases you are possibly losing money as inflation may be higher than the return you are getting on your savings !!
- Investing in company stocks and shares is another option. This option offers excellent growth potential in return for varied levels of risk to your capital. It has been demonstrated that over the medium to long term, equity investment (stocks and shares) consistently outperforms deposit accounts. Remember we have a wide rang of products with some products providing 100% capital protection over the term.
By spreading your investment over a wide range of shares, you reduce your exposure to risk. If one share falls, another may rise and this balances out performance. The easiest and most cost effective way to invest in a wide range of stocks and shares is to invest your money in a bond. This will give you access to the stock market through unit linked funds and allows you to decide on the level of risk and return that best suits you.
What sort of investor am i?
In general there are 3 kinds of investors.
1) Careful/Cautious – This kind of investor typically will place the majority of his/her money on deposit with a bank/building society. As this type of person does not have a large appetite for risk, he/she may also place a proportion of money in a capital guaranteed bond.
2) Balanced – This kind of investor has more of an appetite for risk than the careful/cautious investor. Typically this investor will have some money on deposit with a bank/building society. As this kind of investor is aware that investing long term typically yields a higher return, he/she will place a bigger proportion of money in stocks/bonds etc. This kind of investor will have an appetite for in vesting in specific funds but may also like a certain amount of his/her capital guaranteed. Managed funds can sometimes be a perfect fit for the balanced investor.
3) Adventurous – This kind of investor can be very aggressive. Typically this sort of person will have first hand knowledge of markets and will possibly have done a lot of research on a particular area/fund. Again this investor is acutely aware that investments over the long term will yield higher returns than deposit accounts. Managed funds and capital guaranteed bonds typically don’t suit this investor as he/she is seeking a higher return than average but willing to accept the volatility that goes hand in hand with higher returns.
At Sheridan Colohan we offer a complete matrix of products to suit all needs. We will work with you to determine which product(s) suit you best and build an investment portfolio designed to fulfill your requirements.