How to achieve your financial goals
How much time you have is another major consideration. However much you may want to invest in the stockmarket, it's not the best option if you are likely to need your cash in the next five years, for example you are saving for a house deposit or a child's upcoming nuptials.
For longer term savings goals - for example your retirement or your child's university fees – where you have a decade or so before you need the money - you are much more likely to achieve your goal with a well-planned investment strategy. Your money should grow faster and there are steps you can take to reduce risk, particularly in the final years before you need the money as your focus shifts from capital growth to capital protection.
In order to achieve your financial goals you can build a balanced portfolio incorporating a variety of different investment types (including cash and funds that invest in everything from corporate bonds to FTSE 100 companies, smaller companies and companies based in numerous countries across the world) or you can simply pick one fund that is in itself a balanced portfolio and offers you access to a broad spread of investments through one single plan.
Moneywise can help you choose the right investments for you, but if your goals are big (say, you want to retire early, or you want to fund a private education for your children or grandchildren) it can be worth paying a fee to get independent financial advice.
A good independent financial adviser (IFA) will be able to help you work out how much you need to save, determine your attitude to risk and suggest the investments that can help you achieve your goals. Through regular reviews they will also be able to monitor the performance of your investments and help you make any necessary changes as and when they occur.
It can cost a few hundred pounds to consult an IFA but most will provide an initial chat free of charge and - if it means you achieve your goals – it can be a price that's well worth paying. Speak to friends and family for recommendations or visit moneywise.co.uk/find-an-ifa to find advisers in your area.
With savings rates remaining at rock bottom and people more desperate than ever to generate a decent income, now could be the perfect time to look at the world of investing. Here’s our guide to all you need to know to check if you’re ready to invest in the stockmarket.
A financial adviser who is not tied to any financial services company (such as a bank or insurance company) and is authorised by the Financial Services Authority (FSA). They can advise on financial products to suit your circumstances. All IFAs have to give consumers the choice of paying by fees or commission and have to explain which would best suit the customer in that particular instance. Also, if commission is paid either by the client or the financial service provider recommended by the IFA, the IFA must disclose what that commission is.
A market-weighted index of the 100 biggest companies by market capitalisation listed on the London Stock Exchange. It is often referred to as “The Footsie”. The index began on 3 January 1984 with a base level of 1000; the highest value reached to date is 6950.6, on 30 December 1999. The index is “weighted” by how the movements of each of the 100 constituents affect the index, so larger companies make more of a difference to the index than smaller ones. To ensure it is a true and accurate representation of the most highly capitalised companies in the UK, just like football’s Premier League, every three months the FTSE 100 “relegates” the bottom three companies in the 100 whose market capitalisation has fallen and “promotes” to the index the three companies whose market capitalisation has grown sufficiently to warrant inclusion. Around 80% of the companies listed on the London Stock Exchange are included in the FTSE 100.