It’s important to know why you’re investing. The first step is to have a good think about your financial situation and your reasons for investing.
For example, you might be:
- looking for a way to get higher returns than on your cash savings
- putting money aside to help pay for a specific goal such as your children’s education or their wedding
- thinking about retirement.
Thinking about your reasons for investing now will help you work out your investment goals and influence how you manage your investments in future.
What are your investment goals?
You’ll need to give some thought to your investment goals. There are two main options:
Investing for growth vs. investing for income
Investing for growth means buying investments that are expected to increase in value over time. Let’s say you have £10,000 to invest. If you invest for
growth, your goal may be to turn that £10,000 into £12,000. You’re not looking to make a regular income from your investment, instead you’re looking to
receive a larger long-term gain.
If you invest for income, you’re not expecting the amount that you invested to grow into a larger amount. Instead, you’re aiming to make a regular income
from your £10,000.
How long should you invest for?