Why should I invest when I retire?

If you’d like to see greater returns from your savings, it could be time to explore your investment options.

Why should I think about making investments at all?

We’d all like to live out a long and prosperous life. By investing money, you could achieve a greater return over the longer term (typically 5-10 years) than a conventional savings account. 

How do investments differ from savings?

Saving: Is putting money aside to use in the future. Often this money will be used for a specific purpose or for use in the event of an emergency. With savings there is a very low risk to your money and will often involve using a bank or building society account. You normally get back the amount you put in plus some interest, although the interest you can earn is limited.

Investing: Is using some of your money to buy assets that have the potential to increase in value over the long term. Investing can produce higher returns than saving alone, although you must be willing to accept a higher level of risk. 

Aren’t investments risky?

All savings and investments are exposed to some risk, although the amount and type of risk will vary. For example, saving into a bank or building society account exposes your money to the risk of losing value in real terms if the interest earned doesn’t keep up with inflation, although there is little risk to your original capital. On the other hand a stock market based investment might provide a higher return than inflation but your original investment can fall as well as rise.

Is investing right for me?

It could be worth considering investing if:

  • You would like to try and achieve a greater return from your money.
  • You don’t have any debts.
  • You have an alternative ‘emergency’ fund to cover any expenses for six months or so.
  • You are happy to commit for the long term, at least five years.
  • You understand and are comfortable with the risks of each investment you plan to make. 

How much should I invest?

There are a number of factors that can influence how much you should invest, examples include;

  • Your personal situation.
  • Your needs and goals.
  • Your attitude to risk and capacity for loss.
  • How long you can invest for.

How much does it cost to invest?

This will depend on the amount you invest, the type of investment you make and the company you choose to invest through, examples of typical costs include;

  • If you purchase shares directly there will be a charge for using the stockbroking service.
  • If you decide to purchase investment funds there may be up-front and annual charges you need to consider.
  • If you use a professional financial adviser there will be a charge for the work they complete on your behalf.

There can be a number of different costs to consider when investing and its important you understand these before you decide to proceed with an investment.  

Getting advice

Investing can be a complex area, if you are unsure whether investing is the right thing for you then we would recommend that you get advice from a financial adviser.