We spoke to Adrian Cooper, a previous Accountant turned Finance Director and CFO. So we’ve got money (finally), how do we invest it?

Essentially, investing any money hoping it will be worth more than the original sum comes with its risks. That being said, all investments come under low, medium or high risk. 

Low risk:

• Put money in a savings account, or a cash ISA, or buy Government Bonds: The risk of losing money is low. But the risk of inflation being higher than the rate of interest you earn on savings is also an issue.
• Put money into a long-term savings/deposit account: You will earn more interest than in an account that allows you to draw it out immediately. But you may not be able to access the funds for 30 or 60 or 90 days.
• Buy gold: It sounds ridiculous but buying gold is a good investment choice, especially when economics are in trouble, because it is in demand. Unlike putting cash under your bed, gold will not lose interest, whereas your gran’s birthday tenner wiill be worth less in a year due to inflation.

Medium Risk:

• Buy shares of quoted companies, on the stock exchange: These can be in the UK or overseas. There are many providers and you can self-select the individual shares, but this is a very high risk high reward potential.
• Buy a ‘bundle’ package that simply tracks a basket of shares, and diversifies your risk exposure to just 1 share/company.
• Buy a shares ISA from many providers. This means you invest into a ‘basket’ of companies which lowers your overall risk but also means if the overall market falls, the value of your investment will fall.

High Risk:

• Place bets that a share will rise or fall and invest or dropout.
• Buy shares in smaller companies: Do this on the UK Alternative Investment Market, but this method is risky as small companies have a history of failing more frequently.
• Buy cryptocurrency. It is a gamble, based purely on market sentiment, with NO physical assets behind it. It is about as safe as gambling your money on a horse race or sporting event. Investors have made a lot and lost a lot.

So, understand your money is precious. You have worked hard to earn it, so you should balance the risks and rewards of ‘investing’ or ‘saving’ it. It comes down to having a portfolio of risk….so don’t invest all your money just in 1 place. The higher the rate of return, the higher the inherent risk. 

• Have some money invested into the big corporate blue-chip firms on a major stock exchange (e.g. London or New York). 
• Use your UK ISA allowance if you have enough spare cash each year (The Government limits how much you can invest into an ISA each year).
• Invest into a Personal Pension if you can. There are normally good tax incentives to do so….both as a young saver, but also when you come to retirement.
• Remember the saying “a fool and their money is easily parted”……. If something looks simply too good to believe, it probably is – steer clear.