Starting out – Investing
Investing isn’t just for the very wealthy, but it is a long-term commitment. When you’re starting out you need to balance your short term needs carefully with your long term objectives. It is important to save for an emergency fund. We would recommend at least three months of expenditure, and this should be held in readily accessible cash.
Once you are in the habit of saving and have built up your emergency fund, you can start to focus on longer term savings. When we say long term we really mean over five years. Investing in equities is likely to deliver better returns than cash over periods of this length, but you need to be prepared to tolerate short term fluctuations in value.
Did you know that you can invest into a stocks and shares ISA and not just a cash ISA? Each year you can invest up to £20,000 (Tax year 2022/2023) without having to pay any tax on investment gains you make or on any interest you earn. Long term a stocks and shares ISA tends to perform much better than cash especially when you take into account inflation. Of course, investments can go down as well as up!
Returns are not guaranteed but investing over a long period of time may help you to achieve some financial goals such as saving for a mortgage deposit or planning for retirement. We can help you with your budget so you know how much you have available to save and give you guidance on the best tax wrappers to use.
Investments; The value of units can fall as well as rise, and you may not get back all of your original investment. The tax treatment is dependent on individual circumstances and may be subject to change in future. Tax Planning advice is not regulated by the Financial Conduct Authority.
