Investing for the Future

Is the glass half full or half empty? That is a question of perception. To many people the current state of the financial markets is gloom and doom, but for others it represents a real opportunity for the future.

If you are trying to build up a capital sum for the future by saving so much a month, or if you are thinking about investing a lump sum, you may wish too ask yourself this question; “Am I better buying into the markets when prices are high and therefore expensive, or would I rather buy when prices are low?”

Investing is all about managing risk. If you don’t want any risk at all, then you should stick to cash. However, you won’t see much in the way of growth above inflation. If you are willing to accept some element of risk then you can look at other types of investment to try and get some real growth (that is above inflation).

If you have a lump sum to invest for the future, there is an element of timing that people can worry about. Nobody likes to see the prices go down just after they have bought! But there are companies that understand this fear and have specially designed products that allow you to “drip” your money into the markets over an agreed period. This could very useful in these uncertain times because as the markets move up and down, your money is invested in slices, each slice buying at a different price, some may be higher some may be lower. This is called “Pound Cost Averaging” and is a very effective way of controlling the risk of when to invest.

The same principle works if you are saving on a regular basis, and because you benefit from this ongoing averaging effect, many people are keen to be more adventurous in the early stages especially when prices are cheap.

The longer you have to save, the more chance you give yourself to really build up your savings, or put another way, start as soon as you can.

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