Saving money is a goal that many people will have, but savers currently have little incentive as interest rates struggle to recover from the ongoing COVID-19 pandemic. Therefore, Britons are encouraged to open up to the idea of investing as a potential solution to their savings problems, as it could help under certain circumstances. Many people may be against the idea of investing because of the perceived risk it represents in relation to saving cash.
Ms Williams said it was always a good idea to keep three to six months of cash savings, the amounts of which vary depending on personal circumstances, but after that point the investment can be continued.
She added, “We would recommend that people start small, soak their toes in water and put a small amount in each month.
“It might mean setting aside what you can afford in a diversified portfolio to mitigate the risk as much as possible.
“Some people will choose to look at various portfolios and exchange-traded funds (ETFs) to see what works best for them.”
But Ms Williams also expressed her frustration with preconceived notions of what the investment will involve. Namely, that individuals will earn a lot of money.
That she said, is unlikely to be the case, and instead, she posed the investment as a way to receive a good potential return over a long period of time.
However, once this preconception is tackled, Ms Williams said, staying engaged at a reasonable level with your investments is essential.
While over-checking and regularly tinkering with investments is not considered a good course of action, Brits should consider reviewing their portfolios at times when it may make sense to do so.
These could be major life events or a change in personal circumstances that could alter a person’s outlook on the end result they hope to achieve with their investments.
Either way, Ms Williams concluded by stressing that investing is a long-term endeavor, which requires a certain degree of patience if the British are to be successful in their efforts.
She said: “The problem is that with the investment you get a statement or go to your account online and you can immediately see the absolute rate of return.
“It could show that your portfolio has grown by seven percent over the past year and that it’s just a small amount of money. But in reality, the money you earn often comes from dividends and then subsequently from the composition of the return.
“If you made a certain amount this year, then the growth you will make next year will be on a larger amount.
“It’s a technical point, which can be hard to understand at first, so it’s definitely worth taking into account.
“But that’s why investing is slow, it’s not something you do quickly to get instant return.”