When is too much cash a bad thing?
Building up capital in a savings account can be reassuring but the value of cash erodes over time, which could impact your future plans, for example buying a new property, funding your children’s education or enjoying a comfortable retirement.
Where should I invest excess cash?
There’s no one-size-fits-all approach. An investment strategy for surplus cash should match your current and future goals, which is why it’s important to seek personal financial advice. Your Finli planner will help you understand how much money you need in the short, medium and long term and recommend suitable options for you.
For example, you might want to put some cash in a fixed one-year bond if you know a big purchase is on the horizon and invest the surplus in stocks and shares for a longer period of time to maximise the potential for higher returns.
How can I avoid losing money when investing?
According to a recent survey, nearly half of Brits believe investing is too risky,2 which means millions of people are missing out on opportunities to potentially grow their wealth. Beyond an emergency cash buffer, holding too much cash becomes a missed opportunity.
Although markets fluctuate, history shows that investment returns typically tend to outpace cash savings over the long term. Nothing is guaranteed, of course, but history shows that while shares experience price fluctuations, their long-term growth potential makes them a more effective way to preserve and grow wealth over time.
Diversifying investments across a variety of asset classes and using tax-efficient investment vehicles can help protect against inflation and improve long-term growth prospects. This approach helps smooth out returns over time, as asset classes perform differently in various market conditions. By carefully selecting a mix of assets, your Finli planner can help you position your portfolio in line with your objectives and tolerance for risk.
The same survey found that one in five people say they have lost money because of a decision they did not fully understand. Your Finli planner will take time to talk through different options and the potential risks involved, so you can invest with greater confidence
How much money do you need to start investing?
Nearly a third of people believe investing is only for the wealthy or requires a large amount of money to get started,2 but this is not true. Investing is an option that everyone can explore at every stage of their lives.
To help Brits unlock the potential of investing, the government has launched a campaign backed by several big financial brands, HM Treasury, the Financial Conduct Authority and the Money and Pensions Service. The campaign aims to shift perceptions and encourage today’s savers to become tomorrow’s investors.
Investing: from taboo topic to talking point
With nearly half of people saying money still feels like a taboo subject in the UK3, talking can be a great way to boost your knowledge and confidence around investing.
It’s important to always seek trusted advice before investing – especially with scams on the rise. Talk to your Finli planner today about how to maximise returns from your surplus cash.
The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated.
1Rathbones, 2Aviva, 3Barclays
