There has been a lot of talk recently of poor deposit rates offer by domestic banks, long gone are the days when bank deposit rates fell well above the inflation rate and individuals could sit back and watch their money grow. In the present climate the art of beating inflation and maintaining the purchasing power of your savings has taken a new turn, as people flock towards the term ‘Investing’. Although even the sound of the word frightens the majority of individuals we are seeing money come back into the market.

Investing is a way of trying to beat inflation. In its purest form it gives your money the potential to grow at a higher rate than cash over the medium to long term. However as we all are aware with any investment the value of your fund can go up or down and you may end up with less than what was paid in, however with all this in mind we are now starting to see individuals take on more risk to preserve the purchasing power of their cash. So how can we beat this inflation trap?

Investing is usually divided up into four main categories which can be seen below however there are a vast array of financial products and derivatives open to investors if they wish to choose such an option.

Cash: Money held with financial institutions, generally regarded as Low Risk.

Bonds: Loans issued by Governments/ Countries/ Companies, which usually pay a regular annual premium until maturity. Generally regarded as Low-Medium Risk.

Property: Both residential & Commercial, regarded as a risky asset and would fall under the High Risk category.

Shares: Individual takes a physical share in a company, shares can fluctuate in volatile market conditions and are generally regarded as High Risk.

My advice to clients is to utilise managed funds as an easy way to start investing. When you invest in a fund your money is pooled together with fellow investors, together you can buy many more types of assets that you could purchase on your own. The fund is managed by a professional fund manager who decides what to buy based on the aim of the fund. It is important that you have selected a fund that matches your tolerance to risk and your individual risk profile.

Call us today for a free consultation and an in-depth guide to the products and services that are available on the open market helping your money work for you.