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Whenever a potential client comes to me and asks me to help them invest some money, my immediate response is “Why?”
I’m not being facetious, I want to understand the reasons they want to invest, and I’m looking for an answer more thoughtful than “to get richer” or “to make my money work harder.”
I am convinced that money is never an end in itself, but instead is a means to an end. What that end is, is linked to the investor’s goals, hopes, dreams, aspirations and plans. Maybe they want to be able to pay for a daughter’s wedding, or a son’s first house deposit. Maybe they want to retire early enough to do some serious travelling while they have the health to do so. There are no right or wrong reasons – everyone is different and has their own motivations.
Three uses of money, I believe there are only three valid uses of money:
1 – Spending on stuff /2 – Investing toward a desired end /3 – Giving away
Investing then, falls into the second of these. So before you go any further, answer the “Why?” question for yourself. What is your motivation for investing? Maybe write down the reasons, putting some amounts and timescales on them.
Why not just save?
Other than your own reasons for investing, there are some objective reasons too. It has been proven that over most long term timeframes, real-asset investments like shares, bonds and property tend to outperform cash held in the bank. We are years into the longest ever period of record low interest rates. If you think you can achieve your long term aims by saving into deposit accounts you’re probably going to be disappointed.
One reason that real-asset investments often outperform bank deposits is because they have a capital value, which can go up and down, as well as throwing off an income. Combine these two and your investment value can really take off.
But how do you invest? How do you get started? Contact Below:
Steven J Gillespie Regional Director – CI Associates