Topic Summary
Investing means putting money into an asset with the hope that it will generate a profit in the future. Assets can include stocks, bonds, property, or business ventures. Investments can also involve currencies, jewellery, art, and more.
Reasons to Invest:
- Grow your money through compounding
- Save for long-term goals such as buying a house or retirement
- Help expand businesses
- Beat inflation by earning returns that outpace rising prices
- Gain financial independence and confidence
An investment platform (also known as a fund supermarket or wrap) allows you to buy, hold, and sell a range of investments online. Platforms typically charge fees based on the value of your investments and trading activities, so it’s important to compare options.
Popular Long-Term Investment Options:
- Stocks and Shares: Represent a fraction of ownership in a company. Risk includes potential loss if the company performs poorly.
- Bonds: Loans to a company or government that are repaid with interest. Bonds carry risk if the issuer defaults.
Every investment involves uncertainty. Research is key:
- Use trusted sources (reputable publications and media outlets)
- Seek advice from a registered financial adviser
- Watch for red flags and review past trends
Question
When it comes to investments, bonds are:
Discussion
Do the rewards outweigh the risks when it comes to making investments?
How it works in real life
Research past trends of stocks and shares versus bonds in the UK. Which investment would be considered lower risk?