Financial security is a huge factor for most women, and there’s no better time than now to get the ball rolling and consider investing your hard-earned cash.
A Stocks & Shares ISA offers flexibility and the potential for healthy returns over time – read on to discover more about the best way to invest.
- Many women want to be financially secure, and poor interest rates on savings accounts mean there’s no better time than the present to consider investing.
- A Stocks & Shares ISA offers flexibility and the potential for healthy returns over the long term.
- Your Wellesley adviser can advise you on the best way to invest your Stocks & Shares ISA.
Cash is queen
You’re making good headway in your career, your salary is moving in the right direction, and you may well find that you’ve got a bit of extra cash at the end of the month, thanks to the savings you’ve made having worked from home.
But what should you do with it? Financial security is important for many women – both for themselves and for their families – and so, to achieve this goal, it seems wise to put away any extra cash you have for your future.
The gender pensions gap is a problem for all women – and mothers are particularly at risk. For more options and choices later down the line, you need to look to increase your financial buffer.
Perhaps you’ve been considering investing for a while, or you might just be somewhat dismayed with the poor interest rates available on savings accounts. Either way, now could be just the right time to try it out for yourself.
Slowly but surely
It’s highly likely that you’re already investing, thanks to your pension. But did you know that a Stocks & Shares ISA offers a more flexible and active introduction to investing?
Firstly, it allows you to access your money whenever you need it – and if you decide to leave it for the long term, it could potentially provide a pot of cash that will open up your options when you come to eventually wind down from work.
Something else of note is that you don’t have to buy shares to put in your Stocks & Shares ISA – you can instead invest in a collective fund with a manager who handles a portfolio of shares on your behalf.
However, it goes without saying that, even with the support of talented fund managers, risk will always play an inevitable part of investing.
We’ve all encountered individuals who boast about the money they’ve made on their latest investment punt; however, the stock-market investing referred to here isn’t about stock-picking, wagers or long shots.
Instead, it’s a steadier and more considered route to wealth, where very basic investment principles do the hard work – not necessarily research or stock selection.
You can’t rush a good thing
Volatility is par for the course over the short term, but if you have a minimum of five (preferably 10) years, there’s a higher likelihood that you’ll end up much better off than you would have been had you left your money in a savings account.
Investing a lump sum – such as a work bonus or inheritance, for example – can be high risk. If markets were to fall shortly after you invest, you could be on the receiving end of a sudden loss.
Alternatively, saving little and often – for instance, £150 a month – mitigates that risk, enabling you to benefit from something called ‘pound-cost averaging’.
Picking up units on a monthly basis results in paying an ‘average’ overall price for your investment. You buy some units when prices are high and some when they are low – providing a more straightforward return than you would get from buying a bundle in one go.
Investing in this way means that falling markets don’t have to sound alarm bells – rather that the following month you’ll buy up more units for your money, leaving you in a better position to take advantage when markets hopefully recover.
Granted, you might not be amazed by your returns in your initial year but, as time goes on, the real magic of investment returns (compounding) will gradually become apparent, where you begin to earn money on your returns – not just the money you pay into your account.
The nuances of investing
It’s all too easy to get bogged down by the risk, jargon and pressure to select the best stock or the highest-performing fund when it comes to investing.
However, be mindful that it’s not a right or wrong, black or white decision: it’s about doing ‘something’ rather than nothing. Regardless of whether your investment is the best performer or not, the important thing to do is to take a deep breath and start that journey, in order to witness your money work smarter for you.
Over the long term, you’ll find that you learn a lot along the way and gain confidence. You’ll be free to change your investments and start paying in more, perhaps with particular goals in mind.
It goes without saying that a certain amount of research and effort is required when it comes to choosing a Stocks & Shares ISA, and deciding what to hold in it. But don’t worry, as this is where your Wellesley adviser comes in, helping to relieve you of some of the decision-making on your to-do list.
The value of an investment with St. James’s Place will be directly linked to the performance of the funds you select and the value can therefore go down as well as up. You may get back less than you invested.
An investment in equities does not provide the security of capital associated with a deposit account with a bank or building society.
The favourable tax treatment of ISAs may be subject to changes in legislation in the future.