If you are in the UK and considering making investments, there are countless options open to you, but they all fall into one of four categories - shares, property, savings and bonds. The type of investment that you choose largely depends on your attitude towards risk, but the following outline should give you some idea of which area best suits you and your financial situation.
If you buy shares, it means you are investing money in a company that is listed on the Stock Exchange. Some people buy shares in one single company, some choose a specific sector, perhaps if they have a particularly good understanding of that industry. Other investors prefer to spread their money around; reducing the risk of loss should any area experience a sudden drop in value. Others prefer to purchase a share fund which invests in a range of companies on their behalf. Share dealing has become a popular mode of investment in this country, however returns are unpredictable and unless you have a good understanding of the subject you might find that it is worth employing a fund manager.
Property investment has seen excellent returns over the last few years, and is expected to continue to do well in the foreseeable future. If you are considering this type of investment, bear in mind that the initial costs can be very high and you are likely to need a certain amount of available funds to maintain the property. In addition, if you run into financial difficulties, access to the funds invested is much more difficult here than with other forms of investment.
Putting your money into a savings account is safe and straight-forward, and can yield good returns of up to five percent if you choose the right type of account. However, once you have allowed for inflation, the true return can be relatively low.
A bond is essentially a loan that is traded on the market, and generally comes in one of two forms: a government bond, or gilt, or a corporate bond, which is a loan to a large company. A bond's value will generally rise and fall in line with interest rate fluctuations, but in the long term should give a moderately better return than any cash savings can.