Investing might have developed a bit of a bad reputation in recent years, spurring the British public to become hesitant to get involved in the stock market. In fact, new research revealed just how gun-shy Brits are.
This does not constitute advice and advice should be sought in all instances before acting on it.
Despite recognising the fact that stocks could provide better returns long-term, 80% of Brits polled indicated they prefer to leave their money in low-interest cash accounts (Wesleyan)
The research revealed even more about Britain’s attitude toward investing:
58% admitted they believed investing was only for the rich – and for respondents under 35, that percentage increased to a staggering 62%!
Unfortunately, despite 70% believing the stock market is more profitable, a mere 12% have invested in funds or individual company stocks.
Saving vs investing
Saving is the process of putting away money earned now for future use. Usually, people take a portion of their pay and keep it in a specific savings account. Regrettably, cash savings are not staying consistent with the rate of inflation so savers are actually losing money in the long run.
Investing, on the other hand, is the process of taking money and putting it towards the purchase of an asset where the value will appreciate over time or be able to generate an income-like revenue. Instead of simply putting away that portion of your salary, you put it towards something that will make even more money for you.
While there might be more risk involved in investing in the stock market, a diversified portfolio – complete with property, stocks, funds, etc is the key to a successful strategy.
Investing comes out on top
As an example, if you put your salary into a savings account, you might get an interest rate of 1.45% for an easy access account according to MoneySavingExpert’s top saving accounts (as of 24th Sept 2019). However, the Bank of England puts the inflation rate at 1.7%, with a target of 2%. This puts the value of your savings in real terms into negative even after just one year.
On the other hand, you could put your money into a medium risk investment portfolio with a return of above 5%, which clearly provides a significantly higher value pot. Obviously, there is higher risk in this route, and seeking professional financial advice is always key to solid investing.
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While a solid financial strategy will involve both saving and investing, it’s important to prioritise the method of wealth-building that will help you get the most bang for your buck.
Dental & Medical Financial Services have been helping doctors and dentists develop and preserve their wealth for years. We can advise on what you will need financially in order to live your desired lifestyle by recommending ways of potentially achieving your goals.
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