If you’ve got a tidy sum in the bank and no immediate plans to use it, you should be looking at the best ways to invest your money. With interest rates at record lows, standard deposit accounts no longer offer competitive returns, so what are the alternatives? Here’s a look at some of the best ways to use your money wisely.
Buying shares in a company offers the chance of high dividends, but rates can go down as well as up, and if your company doesn’t perform well, your share price could plummet. If you’re serious about shares, you can buy them yourself via an online dealer, or hire a stockbroker to assemble a portfolio for you.
Investing in bricks and mortar, whether for commercial or residential use, has long been considered one of the best ways to invest money, although it’s traditionally a long-term game. If you’re smart or lucky enough to buy when prices are depressed and sell when they peak, the returns can be very high indeed. However, bubbles can burst unexpectedly, so property investment is not as safe as houses.
Commodities are goods priced according to the demands of global markets. You can stick your money in hard commodities (goods extracted through mining, such as gold, iron ore or crude oil) or soft (grown goods such as wheat, rice and coffee).
Buying bonds – or fixed interest securities – involves giving your money to a government or company to invest. Corporate bonds offer the best returns, with rates sometimes running into double figures, but the risks are greater and if the company you’ve backed goes belly up, you may lose all your capital.
Fixed-rate bonds provide better returns than regular savings accounts, but you’ll need to tie up your money for up to five years. On the bright side, the Financial Services Compensation Scheme (FSCS) will guarantee your investment to the tune of £85,000.
If you enjoy the lottery, buying premium bonds will give you a chance to win £1m in the monthly draw. The chances of winning are slim, however, and the interest rate is typically low.
Sending money overseas isn’t just about cash transfer. You could opt to transfer money into property overseas via remittance payments. With online remittance services making money transfers faster and more accessible, smart investors with an eye on international markets could stand to score high returns.
P2P lending is relatively new and not without risk (as your money is not protected by the FSCS) but the potential rewards are high. Websites such as Zopa put you directly in touch with those looking to borrow, but you’ll need to be web-savvy as this form of investment is online-only.
Transferring funds from low-interest accounts to higher yielding investments should pay dividends, but only if you do your homework. Wherever you choose to invest your money, remember that higher returns typically entail higher risks and longer-term investment.