The investment market is vast and can be daunting to even the most astute investor. Each investment product is different from the next and with so many nuances between seemingly similar products, genuine like-for-like comparisons are hard to come by. The great thing about this is that the market can cater to a huge array of financial goals and appetites, but how do you decide if an investment product is right for you?
If you’re deciding where to invest your funds, try asking yourself the following six questions. These are questions we would encourage anyone to ask themselves before making an informed and considered investment.
What are my financial goals?
Before making any decision in life, it is important to define what you want to achieve. Having a financial goal will help you create a strategy to help you reach the desired outcome. After all, it can be tiresome working towards something without an end goal. Do you want to increase your portfolio by a certain percentage? Do you want to generate capital to help pay off your mortgage? Set an outcome and use this to asses if an investment product can help you achieve this.
Establishing a goal before investing is a crucial step. Sometimes it can be beneficial to sit down with a financial adviser to help you make decisions and be proactive in creating investment plans for your future.
Do I understand the risks?
Ensure you fully understand an investment product and the associated risks before investing. How much risk you are willing to accept is personal to every investor. Only you can make the decision.
Do I want to maximise my capital?
How much interest will you earn on your investment? How does this stack up to your financial goals? Ensure you understand how much income you would expect to earn on your investment. Why not use Wellesley’s handy investment calculator which can be found here to help you understand how much you could earn.
Would I benefit from monthly income from my investments?
Investment products offer a variety of payment options. Interest on The Wellesley Property Bond is paid into investors’ holding accounts on a monthly basis with full capital returned on maturity. Many investors prefer to have this steady stream of income each month.
How long do I want to invest for?
If you’re investing for a particular financial goal, the investment period will depend on how quickly you want the money. Are you happy to put away funds for 1 year, 2 years, 3 years or more? Or do you require instant access to your funds? Typically, the longer you’re prepared to invest for, the better the rate of return.
Have I utilised my ISA allowance this year?
Every UK resident is eligible to take advantage of tax-free savings on interest earned on investments of up to £20,000. If you haven’t allocated your full ISA allowance you could be missing out on additional savings.