Investing that is a little more family friendly
Now that online trading websites have opened up the investment market to the average person, they are an incredibly popular way for families to save for their future. There are a lot of family-friendly investments that were once only available through a financial adviser, but now these can be purchased online with ease, and there are a few different types of investments that will offer you a sense of stability while still making money.
OEICS and Unit Trusts
OEICS and Unit Trusts sound more complicated than standard stocks and shares investments, but once you get to know how they work, not only are they incredibly simple, but they will also help spread your risk. An investment into an OEIC or a Unit Trust can still be made through online brokers like CMC markets, just as you would with stocks and share investment.
An OEIC or a Unite Trust is basically a fund made up of loads of different investments. So instead of buying into that investment on a single basis, you buy a slice of the ‘pie’ which is made up of all of the different investments and price depending on how well each individual one does. This is a great investment plan to chose for a family investment, because you have the peace of mind that if one stock falls dramatically, the others will bolster it up that are doing well, and the fund could well still be in profit, and this is how risk is spread.
Forex trading is something that tends to make people nervous or perceive it as a risky market, but there are ways you can make family investments in things like Forex without taking too much risk on. Basically, Forex trading is away of trading one currency off against another to make a profit.
If this is something you wish to look into for a family investment, then you do not need to go into a high-risk investment first off, as you can easily learn the ropes by trading stable currencies like the US dollar and the UK pound.
Bonds have always been known to be safer than stocks and shares, as they work a little different and they are more of a long-term investment. The structure of bonds is that they are basically a form of debt. Essentially, you get the bond when you loan your money to either a company or your countries government, and then they pay you back at interest. Government bonds are always a solid investment because unless you live in a very unstable economy, it is very likely they are going to pay back. Any companies or governments that issue bonds that may be a bit risky, will have to give you a higher yield, which means that you will get a better profit for buying into the riskier investment.
When you make an investment, there are also products which act as ‘investment wrappers’, which give you a form of tax relief on what you are saving. Many countries do this as a way to get people to invest.
ISA’s (or individual savings accounts) are an investment wrapper that will give you the opportunity to either invest cash or shares, tax-free up to a certain amount. The ISA limit for the tax year 2016/2017 is £15,240, and the ISA limit for the tax year 2017/2018 is £20,000. Essentially, you can put all of the above investments in this wrapper and you will not be charged tax on them.
The great thing about ISA’s is that you can also hold ISA’s for children, so if you are investing for the whole family, you can wrap their investments too.
Even though pensions will work more individually, many pension providers have now picked up on the fact that people are looking towards their future earlier. How much you can save in a given pension will vary depending on the supplier. There are also a few pensions that now let you cash out slightly earlier than you would have imagined, so these work in a very similar way to an ISA.