Now may not be the time you would consider to invest in stocks, shares, bonds or other kinds of investment, as we are currently in very changeable and financially difficult times. However, putting money into investments now could actually be beneficial in the future, when the stock markets rise and improve again. If you aren’t sure where to begin when it comes to investments, we have created this handy guide with some pointers.
The first thing you should consider when investing… how much?
Of course, one of the first things you may be considering is how much money you want to invest. Perhaps you have just received some inheritance and would like to place it somewhere where your money could grow. Or, maybe you have saved some money and want to try your luck in the stocks and shares market because you have heard good thing! This is Money use this handy rule: “Would you lose sleep over the amount you plan to invest if it got wiped out in a market crash? If your answer’s ‘yes, it would devastate me emotionally and financially’, think again about whether you’re ready to invest. That’s not a bad rule for novices to bear in mind…’ So, as with all financial decisions, think carefully about what you want to invest and also which level of risk you are prepared to take – a higher risk may pay off later, but on the other hand, you could lose money.
If you want to play it safe
If you wish to have a lower risk asset, then money markets might be the right option for you and is one of the most common forms of investment. Wonga describe money markets succinctly in their money blog as: “a form of deposit account where interest is paid out according to the present interest rate in money markets…It requires an initial deposit (usually between R10 000 and R20 000) as well as a minimum balance.” Money market accounts can be opened by a bank and are slow growing and have stable interest rates, so this is usually seen as one of the safest forms of investment.
You may be more interested in playing the stock market, which carries greater risk. This is where investors will purchase shares (also called stocks) in a company or several companies. Shares represent ownership and are valued at the percentage of the company they represent. What is interesting about this form of investment is that there is no time limit as to how long you can keep your shares. Shareholders can hold their shares for a few minutes, or for a lifetime. You can make a good deal of money playing the markets, but you can also lose it.
Some people decide to invest in property as this is a stable form of investment that novices may be able to more easily make money from. Of course, this does take time and the markets have to be right, but ultimately a property is considered a ‘safe bet’ to some degree, especially if you plan to renovate the property and increase its market value.
Getting expert advice
If you really want to invest your money into something but aren’t sure which route to turn down, then getting the advice of a financial advisor would be a prudent step. Not only do they know the markets well and follow the trends, but they can also in some cases warn you off an investment and will act as best they can for your best interests.