It’s likely been drilled into you all your life: you need to save for your future. But with the current economic conditions – low interest rates and rising inflation, the sensible path for a secure future could be a combination of investing and saving. You’ve worked hard for your money, so below we’ll break down some ways to make your money work hard for you.
This does not constitute advice and advice should be sought in all instances before acting on it.
Cash is still king
Saving should still be part of your financial plan since you will need available funds, for example for a deposit to buy a home or property. And in case of emergency, financial experts recommend keeping enough cash in the bank to cover living expenses for at least three months.
Learn about investing
Don’t go into the world of investment blind. Educate yourself. And remember you’re not alone. It’s our job to help doctors and dentists establish and grow their wealth.
We also offer a variety of fact sheets to help you understand the journey you’re embarking on. A few good options to start with are Investing for the Future and Investment Wise.
Research, research, research
Once you feel comfortable with the concept of investing, take the time to learn about different shares or funds that resonate with you. Take advantage of your relationship with your financial advisor who will point you in the right direction.
Diversify your portfolio
It may be cliché, but it’s true. By throwing all your money into one type of investment, you run the risk of losing it all. Look into funds or investment trusts as the fund managers that control them invest in an assortment of companies, mitigating your risk. Another low risk investment is bonds as they aren’t affected by the ups and downs of the stock market. Additionally, you should consider other assets such as property, as part of your investment portfolio.
Passive vs Active
Passive funds are in demand because of low costs, but they follow the same trends as the stock market so if stocks plummet, so will your investment. In an active fund, you decide where to invest. Fees are higher but the possibility of outperforming the market may make it worth it.
Safe and small
If you’re unsure where to start, you can begin with a fund that includes a variety of investments: equities, property, bonds, and cash. Your return may be modest but you’ll be protected in the event of poor performance.
You can also start by contributing a small amount each month which will let your investments grow consistently over time.
Know yourself
Decide what kind of investor you will be. You can use online investing services to review all the funds and investment trusts, and shares available to decide your plan of action. If you feel comfortable, you can choose and manage your investments on your own or you could get help from a professional.
Alternatively, you can also use a robo-advisor – a digital advisor that provides financial advice based on algorithms. It all depends on how hands-on you want to be.
Investing can be a nerve-racking endeavour, but don’t let fear paralyse you because it can be an incredibly profitable one as well. Be sure to gain knowledge about investing in general, the types of funds you can invest in, and decide how active you want to be in managing your portfolio. But don’t forget to continue saving as part of your comprehensive financial plan.
If you need guidance or advice, the financial advisors at Dental and Medical Financial Services can help you build a successful investment portfolio.
Discuss your investments with a specialist
Dental & Medical Financial Services have been helping doctors and dentists with their investment planning for over 25 years.
Tel: 01403 780 770