Investing for growth: When safe may not be sound
In the long run, the stock market will beat the savings account. Here and on pages 14 to 17 we show how to share in the action
Your support helps us to tell the story
From reproductive rights to climate change to Big Tech, The Independent is on the ground when the story is developing. Whether it's investigating the financials of Elon Musk's pro-Trump PAC or producing our latest documentary, 'The A Word', which shines a light on the American women fighting for reproductive rights, we know how important it is to parse out the facts from the messaging.
At such a critical moment in US history, we need reporters on the ground. Your donation allows us to keep sending journalists to speak to both sides of the story.
The Independent is trusted by Americans across the entire political spectrum. And unlike many other quality news outlets, we choose not to lock Americans out of our reporting and analysis with paywalls. We believe quality journalism should be available to everyone, paid for by those who can afford it.
Your support makes all the difference.INVESTMENT can seem a complicated business, with numerous choices and confusing concepts, writes Steve Lodge. But improving the prospects for most people's savings can boil down to some relatively simple rules of thumb.
Fundamentally, most people have too much of their savings in traditional accounts. Despite rising interest rates and growing competition - including the Halifax's launch of a telephone-based account (see back page) - many accounts still pay a relative pittance. And even the quoted rates are in most cases unattainable: they are normally quoted before tax but face being taxed at your highest personal rate.
By contrast, while stock market investments can fall as well as rise, over five years or longer you should make more money. In recent history you would have done very well being in the UK stock market, and over the very long term no other investment has even come close to stocks and shares in terms of performance.
Stock market investments are particularly suited to people looking for growth (rather than immediate income) from their savings - which is what this special survey is about.
Of course some stock markets perform better than others - witness the recent crashes in Asia - and the timing of your investment can make a difference, but the longer you are prepared to invest, the less this should be a worry. There are also many savings plans that dripfeed your cash into the market and so sidestep the risk of investing everything just before a crash.
You could also come unstuck by picking the wrong share. But there is a huge choice of stock market investments on offer that will spread your money across a range of stocks and shares, so reducing your exposure to the problems of any one company.
Costs and how your investment is taxed are also important, but neither in isolation should dictate your choice. In particular, a tax break on its own will not turn a bad investment into a good one.
q The Independent and Independent on Sunday's free 'Guide to making your investments work for you' is available by calling 0800 137 9749. We also have a new guide to pensions, sponsored by Eagle Star. For a free copy call 0800 776666 or fill in the coupon below.
Join our commenting forum
Join thought-provoking conversations, follow other Independent readers and see their replies
Comments