How to Choose An Investment

Published / Last Updated on 15/05/2017

Investment Choices - Choosing A Suitable Investment Investment Choices

We like to describe investments like supermarkets.  In a supermarket there is a huge range of tins of baked beans of different qualities, different prices and different labels. There is then a huge range of totally different produce available such as carrots, milk, tea, even motor insurance and banking.

This is the same when saving or investing money.  There are over 28,000 different investment funds as well as hundreds, if not thousands of policies offered by different investment firms, insurance companies, banks and building societies.  Even a need to select the right country e.g. onshore, offshore and the right currency match. 

It is just 'mind-boggling'.

In short, we need to ensure you have the right "investment" supermarket, with the right shopping bag, in the right shopping isle, the correct shelf and get the right tin of baked beans to match your taste, size and price.

Before making a decision on the right type of savings or investment plan, i.e. to select a suitable investment for yourself, you need to have an understanding of:

After having read this section and then investigated all the different types of investment contract, we suggest that you:

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But, Do Not Forget The Investment Term: How Long to Invest

How Long To Invest

As well as an investment being suitable in terms of your attitude towards risk, you also need to think carefully about how long a period you wish to invest.

This can be broken down into the following timescales:

  • Short Term - 0 to 5 years
  • Medium Term - 5 to 10 years
  • Long Term - over 10 years

Shorter Term Investment

  • Investments that do not fluctuate in value i.e. low volatility are better for short term investment.
  • Generally speaking, cash based investments such as bank and building society accounts, cash ISAs, and National Savings products can be taken out for anything up to five years.  You will be able to access these investments if you need to.

Medium and Long Term Investment

  • Investments that fluctuate in value i.e. medium and high risk volatility are better for medium and long term investment.  Short term falls in markets should be ignored as holding for the longer term generally offers better chances of growth and rising income.
  • Most other investments, including those that are linked to units or the markets whether directly or indirectly, i.e. they can fall as well as rise, should be viewed over the medium to longer term (over 5 years and above).
  • Products such as endowment policies or others in connection with say a mortgage or long term objective, should be viewed over the longer term (over 10 years).

Warning:  Think long and hard about how long your money will be invested

  • If you are in any doubt about being able to keep your investment running for the length of time necessary, you should look into restrictions and penalties that are imposed for early encashment.  Although there may not be any penalties, you may not get back the return you could have if the investment is not held over the period for which the investment product is designed.

Use as a guide - this is not advice

These comments should be used as a guide only and not as advice in relation to your own particular circumstances.  If you are in any doubt you should request advice from us.


Choosing The Right Investment

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