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When you’re looking at how to invest wisely in the current economic climate, it can be a little overwhelming. Knowing the best places to put your money in order to secure a good return can be a struggle… and that’s not to mention getting your head around all the legal language and number crunching as well.
Luckily though, at Dream Lodge, we’ve compiled some top investment tips to help even the most inexperienced of investors make the right decisions with their hard earned cash.
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This is investment 101 and one of the most crucial things to understand before you start shopping around for investment opportunities. Most of the financial ventures that promise the highest rewards also come with the highest risks.
Shares from developing markets, for example, have proided many private investors with the opportunity to cease life-changing sums of cash. However, a bad month can spell significant and unrecoverable losses, with the worst periods seeing a monthly loss of around 29.3% for emerging markets in the UK.
You’ll therefore need to carefully analyse just how much of a risk you are willing to take. If you have decades ahead of you and plenty of money to throw around, then you may want to go high risk. However, if you are spending your life savings and want to see a good return in a relatively short amount of time, then the best advice on how to allocate money wisely may be centred more around securer investments, such as property. For our best property investing tips, you can read our How to get the best return on investment with Dream Lodge article.
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It’s important that, no matter what you are investing in, you view your financial venture as a long-term commitment. Financial success is a marathon, not a sprint, so patience and a good understanding of your potential annual benefit are both vital.
The vast majority of investments will experience some fluctuation over time. That means that just because your investment may not be performing well right now, that doesn’t mean it won’t go up in the future. If you exit the market too hastily just because things aren’t going how you expect, you could end up seriously missing out.
Over the last decade in the UK stock market, for example, pre-fee returns have been around 9.9% per annum. However, if you had lost faith quickly and dropped out for only ten of the best performing days, your return could have shrunk right down to just 3.5%.
While secure investments, like a Dream Lodge property, do deliver an instant return, you shouldn’t ever look at your investment as a 6-month or 1-year venture. View it for a 20+ year span, and you will benefit far more.
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This is one of the most important but most easily overlooked tips on how to invest your money. Make sure you understand and account for all additional fees that could end up increasing your investment costs.
These fees can vary from relatively low transaction fees to 5-6% in annual fees for shares in a mutual fund. One type of investment that always has additional costs is property. Stamp duty, tax costs, estate agent fees, renovation and refurbishment, can all add up and will ultimately have an impact on your desired return on investment. All this can end up totalling up to 10% of the property value, so it is important to factor them into your calculations before you make a decision.
There are ways around this, though. With Dream Lodge, you won’t have any of these additional costs. Our lodges start as low as £25,000 and come fully equipped, furnished and beautifully decorated, so you don’t have to worry about getting stuck in with DIY. While you are always welcome to roll up your sleeves and add your own stamp to your lodge property, all this means that your investment with Dream Lodge is not only hassle free but returns a higher ROI than many buy-to-let properties as well.
Believe it or not, there are ways you can take advantage of a little extra in tax-free money. If you open up an ISA, you can enjoy up to £11,520 in tax-free money this tax year. These flexible accounts mean you can take advantage of your full allowance, while also saving in tax when it comes to capital gains.
You won’t have to feel worried about tying your money up either. With an ISA, you can withdraw your capital any time you want.
There are various different ISAs available on the market, so speak to your bank, shop around and find the right one that suits you. The tax-efficient accounts are definitely worth the time you’ll put into research, as they’re an absolutely fantastic way to supplement your savings. And you know what they say, every little counts!
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Stop asking yourself “How can I invest my money?” and seek some expert legal guidance. You should never make a decision if there is something you are unsure of, so it is always worth seeking counsel from a professional to help you wrap your head around things.
If you are looking for the services of a financial planner or advisor, stick to services charged at a flat or hourly fee. Some will charge you a percentage of your investment in return for their expertise. Avoid paying this way, as it will cost you far more over the term of your investment.
As with everything in life, make sure you shop around for the right price and the right expert to suit you. Their time and knowledge will prove invaluable.
Although you shouldn’t allow your emotions to dictate your financial decisions, your personal enjoyment is a factor you shouldn’t ignore.
There’s a few reasons for this: when considering how to invest money wisely, you should also keep in mind your own commitment to a project. While many can (and do) manage to stay focused on investments that don’t spark their imagination or excite them personally except for the prospect of a cash return, it is a great deal easier to remain intellectually invested.
Top on many tips on how to invest money is to think with your head and not the heart. While this is sound advice, we’d suggest that, although sound business strategy should always come first, personal enjoyment can be part of that process. To put it simply, you’ll find it easier to spend hours upon hours working on a project if you love it.
Another piece of good advice is to choose an investment that you can still enjoy if, for whatever reason, you need to take a financial step back. For example, if you have money tied up in projects that only have value in terms of potential profit, you have no option to change your mind and start reaping the personal benefits for yourself.
If you invest in property, for example, you have the freedom to change your mind on how you wish to run your business. Additionally, if you decide you no longer wish to run a business at all, you still have several options available to you. The most obvious of which are to live in the property yourself or to rent it out only during certain times of the year.
Flexibility is one of the key strengths of investing in property, and that mixed with the passion people can feel for such an investment makes them a uniquely interesting business possibility.
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