Investing
5 min read 12 Jan 24
Summary: Your finances affect every aspect of your life, including your mental well-being. Reviewing your investments to ensure they are right for you can help you feel secure and in control of your money. So why not make your finances a priority this year? Here's some food for thought to get you started.
Please see our glossary for information on the financial terms used in this article.
You may have heard the phrase ‘don’t put all your eggs in one basket’ but what does it mean in terms of investing? If your portfolio has a high percentage in shares (often called equities), you could think about branching out into other asset types like bonds. A corporate bond is a loan taken out by a company – instead of going to a bank the company gets the money from investors who buy its bonds.
Different assets behave in different ways, for example, shares rise and fall rapidly over time – this is called volatility. The more volatile an asset, the higher the risk and equally the less volatile an asset the lower the risk. Bonds are generally less volatile than shares so investing in a mix of assets spreads the risk and boosts your potential for more steady returns. But, as with all investments, nothing is guaranteed.
Higher-risk, more volatile investments like shares can offer higher returns. And when it comes to the level of risk that’s right for you, your age and your life-stage matter.
Generally, the longer you want to invest for, the more risk you can afford to take. You might not be too worried when your money goes up and down on a daily basis if you’re not planning to access it for 30 years. But if you’re looking to take your money soon or you’re close to retirement, it might work out better if you dial down your risk levels.
If you’re not sure how much risk you’d like to take with your investments, speaking with a financial adviser can help. If you don’t already have one you can find an adviser on our Get financial advice page.
Fees can make a big difference to your returns over time. Imagine you invest £10,000 with a yearly return of 5%. If you paid 1.25% in fees, after 20 years you’d have £20,631. But if you paid fees of 0.5%, you’d have £24,002.
You could also save on fees by bringing your investments together in one place. Whatever ISAs (Individual Savings Accounts) or Junior ISAs you have, wherever you have them, M&G can bring them together for you. Visit our transferring an ISA page to find out more. Please check with your existing provider if they’ll charge you any fees for transferring. While your investment is being transferred it will be out of the market and will not lose or gain in value
Aim to review your finances at least once a year, focusing on what you’re invested in and whether they’re still right for you. It could set you up for many happy years to come.
The value of investments will fluctuate, which will cause prices to fall as well as rise and you may not get back the original amount you invested. We are unable to give financial advice. If you are unsure about the suitability of your investment, speak to your financial adviser. The views expressed in this document should not be taken as a recommendation, advice or forecast.