Investing for income,
growth or both in retirement
The best time to start investing was 20 years ago. The second best time to start investing is now. But as you have been building up your investment wealth over the decades, in all likelihood you’ve probably pursued growth above all else, looking to maximising the value of your savings.
So you’re looking to accumulate a sum of money by investing. You may have a specifc amount in mind. This could be to go towards helping to fund your child’s university fees or to pay for a trip of a lifetime.
Inflation is an economy-wide sustained trend of increasing prices from one year to the next.The rate of inflation is important as it represents the rate at which the real value of savings and an investment is eroded and the loss in spending power over time. Inflation also tells investors exactly how much of a return their investments need to make for them to maintain their standard of living.
Investing for the long term means persisting through market swings. History shows that when people invest and stay invested, they’re more likely to earn positive returns in the long run.When markets start to fluctuate, it may be tempting to make financial decisions in reaction to changes to your portfolio.
Inflation can have a significant impact on our finances in a number of ways. But what exactly does it mean? And what impact could it have on our savings and investments? It’s important to understand how inflation works, as well as the effects it has on our financial planning. As the American economist Milton Friedman remarked, ‘Inflation is taxation without legislation.’
The earlier you commit to an investment strategy, the longer your money can work in the market. However, the world is an uncertain place at the moment. The deadline for the United Kingdom’s withdrawal from the EU is edging closer, and there is also the ongoing threat of an all-out trade war breaking out.
For those looking to make the world a better place, but not wanting to sacrifice returns or profits, impact investing aims to support a positive social or environmental impact as well as looking to achieve compelling financial returns at the heart of sustainable investing.
If you have accumulated a number of Individual Savings Accounts (ISAs) over the years, keeping them all in one place could give you better control and help you save money.There’s a common misconception that you can’t move your existing ISAs from one provider to another.Transferring your ISAs doesn’t affect its tax-efficient status, but you should make sure that you don’t have to pay penalties or give up valuable benefits.
The world of investing can seem daunting.Whatever stage of life you’re at, we’ll guide you through the appropriate investment opportunities available to you. Every investor needs to ask themselves the same basic questions before getting started.
There are many ways to invest and different types of investments. But when looking to build an appropriate diversified portfolio, investors have a number of different characteristics to evaluate. For example, is the investment designed to provide growth or income? Is it domestic or international? Does it have a maturity? Another consideration is whether the investment is actively or passively managed.
A new tax year is nearly upon us – and that means, for all diligent savers and investors, you should make sure that you take full advantage of your current Individual Savings Account (ISA) tax-efficient allowance.
Many of us have been brought up to believe that saving is the responsible thing to do. But in today’s environment of low interest rates and rising in ation, savers may need to consider becoming investors to prevent the erosion of their assets.
Millions of Britons could see their savings shrink, as they don’t know how to shield them from the threat of rising in ation. Currently, UK savers are hoarding over £60 billion in cash for long-term savings and investments, which stands to be eroded by £1.5 billion this year as a result of higher inflation.
Before investing, you need to decide how much risk you are willing to take and consider your ability to deal with any losses. Some investors are happy to take higher risk if there is a chance for higher returns over the longer term, while others don’t want to accept any risk. Others may sit somewhere in the middle.The value of investments can go down as well as up, and so there is always a risk that you may not get back the amount you put in.
Whatever you’re putting money aside for, there’s likely to be a role for Individual Saving Accounts (or ‘ISAs’). Low interest rates on cash savings since the nancial crisis have meant that many savers have turned to the markets in the hope of achieving a better return.
Some people don’t want a pension company deciding how their pension savings are invested – they want to control where their money goes and how it grows. For people wanting to have autonomy to make their own investment decisions with their retirement savings, a Self-Invested Personal Pension (SIPP) may be an alternative solution.
Healthier lifestyles and medical advances mean that many of us can expect to enjoy longer lifespans than previous generations. However, this creates a significant challenge both for society as a whole and for us all as individuals – how to fund a fulfilling life beyond our working years.
The key to successful investing isn’t predicting the future, its learning from the past and understanding the present. To give your money its best opportunity to grow, whether you’re just starting to build a portfolio or looking to rebalance an existing one, we consider some of the key questions you need to consider to nurture your wealth.
A common mistake that some investors make is not diversifying their portfolio enough.To make sure investments are spread across different asset classes, it could contain a blend of equities, bonds, cash, property and others (such as commodities and gold) to benefit from their changing investment cycles.
One of the most effective ways to manage investment risk is to spread your money across a range of assets that, historically, have tended to perform differently in the same circumstances. This is called ‘diversification’.
The start of the new tax year on 6 April 2017 saw the launch of the Lifetime ISA (LISA), which was announced in the 2016 Budget. This is a new type of Individual Savings Account (ISA) designed to help you save for a first home or for your retirement at the same time.To be eligible, you have to be aged between 18 and 39 years old (up until your 40th birthday).
People are living longer. Simple demographics mean that supplementary income is no longer a luxury – it’s a necessity. Meanwhile, interest rates are at historic lows – even before you take account of in ation. So, relative to cash, the yield on equities and corporate bonds looks understandably attractive.
We understand that no two people are alike and that each of us will have a unique set of objectives.As professional advisers, our starting point is therefore always to take the time to truly understand your goals and aspirations and to turn your vision into a reality that creates sustainable solutions for your aspirations.
It’s natural to be looking for ways to smooth out your portfolio’s returns. Investing regularly can smooth out market highs and lows over time. In a fluctuating market, a strategy known as ‘pound-cost averaging’ can help smooth out the effect of market changes on the value of your investment and is one way to achieve some peace of mind through this simple, time-tested method for controlling risk over time.
Savers have had it extremely tough over many years now, and yet many still feel uncertain about making the switch to investing. This is largely because people don’t know quite where to start, and they are wary of the risk.
Dimensional is a different kind of global investment management firm. For more than 30 years, we have translated financial research into real-world investment solutions designed to help investors pursue their financial goals.