High Interest Bank Accounts – Maximising Your Savings!
From bonds, stocks and unit trusts to venture capital, there is a vast array of different types of investment to suit your saving needs. For those willing to take a risk with a chancier type of investment, the returns can be very rewarding. As the saying goes, though, be aware that the value of your investment can go down as well as up. As a rule of thumb, invest no more than 5% of your portfolio.
Basically, a bond is lending a lump sum to a company which promises to pay you interest over a fixed length of time. At the end of the term you will receive either your initial investment or a certain proportion of it. As a lower-risk investment option consider fixed rate bonds, which run for a term of between one and five years. If you withdraw your money before the term is up, you are likely to face stiff penalties, but you will be guaranteed a certain return at the end of your investment.
The only risk you take with this type of bond is that if interest rates go up while your money is tied up in one your initial stake will shrink in value. Bonds come in a smorgasbord of different types – depending on how much you have to invest (often there’s a minimum of a few thousand pounds), and for how long. They can be linked to shares in a company, offer a guaranteed income over the term, or a guaranteed return at the end of the term. Government or gilt bonds are a safe but usually unspectacular option.
- Unit trusts and Investment Trusts
Investors’ money is pooled, and invested in the stock market. This is a good way to spread your interests over a range of stocks, and your buying power is effectively increased as your money is combined with that of other investors’. There are conditions attached, such as minimum investment and annual management charges. Risk depends on factors such as: where companies are based – whether in emerging markets such as Asia or Eastern Europe – and which industry the companies work in.
Sharedealing can be a very risky occupation. If you want to explore it, you’ll need to conduct transactions through a stockbroker. The level of input the broker has is flexible – they can manage your portfolio on your behalf, or merely carry out your explicit instructions. General wisdom is to spread your investments over different companies and industries.
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