Investing is fun, exciting, and, if you get it right, financially rewarding. There are so many ways to invest, from savings accounts to property, stocks and shares, ISAs, art, wine, classic cars, and more. However, if you choose to invest, there are a few guiding principles to steer you down what could be a profitable path.
Do I understand the risks, and am I okay with losses?
Nobody truly understands all the risks of investing; otherwise, it’s not a risk. Generally, the higher the potential return, the higher the risk. But if you don’t like risk, invest in a savings account. You may not make a great return, but the risk of losing your hard-earned money is kept to a minimum. If you are prepared to invest in higher-risk investments, it’s important to be prepared to wait and possibly lose some of that money.
What are the terms of the investment, and how much access do I have to my money?
It's important to do your research; don’t be afraid to find out certain fundamental information. Who oversees the company? What are you investing in? It could be new technology. Consider how quickly you can exit the investment if you change your mind or decide to invest elsewhere.
Is my investment regulated?
Many investments are regulated by the FCA (Financial Conduct Authority), but others are not. Therefore, you must weigh up what kind of investments you want to make and how long or short-term these investments are likely to be.
How protected is my investment?
Some investments have no protection at all, while others offer a little protection. For example, investing in a savings account is virtually risk-free. But if you worry about your building society going bust, then the FSCS (Financial Services Compensation Scheme) could help compensate you. Investing in the stock market can’t be insured, but there are ways to protect your investment.
Do I need financial advice?
Seeking good financial advice when it comes to investing will help you spread the risks and opportunities of your investments. Many financial advisors will suggest that you mix up your portfolio with a variety of investments to mitigate that risk. It could be that you decide to invest in an ISA, play the stock market, or play it safe with a savings account. Or perhaps you are passionate about art, cars, wine, or other investments and are not interested in the services of a financial advisor.
Conclusion: Choose investments you can insure
It’s clear that some investments offer more risk and protection than others. And while you can’t insure against shares performing badly on the stock exchange, if you invest in your passions, at least you can insure them at the current market value. Perhaps you invest in art, classic cars, or property? If that house, car, or asset is valued at its true market value, then you are protecting your investment.
Get a quote for the right kind of insurance to protect your investment.