Tuesday, June 4, 2013

How to Make Money, With Your Money! By Nathalie Martin

I am sure, like me, you keep hearing about how bad the economy is at the moment, and how poor interest rates are on savings, but how high they are on debt. Banks do not seem the safe money-keeping houses they used to be, so people are looking for better things to do with their money, and I don't blame them! Most working adults by the time they are 30 will have either just started saving, or have a substantial amount saved for a rainy day. This money at the moment seems to just be sitting there, yes it may be safe, but it is not getting bigger! I have been exploring ways to get my money working for me, and here are some of the best and most simple options I have found.
Investing money you already have is a bit of a gamble (but not gambling, I am assured), stocks and shares fluctuate depending on the market so it is not easy to predict. There is not a set limit to the amount you can start investing with, £5 a week will gradually show you a return. You can invest in stocks, where you are buying a share of the company, so you also get a share of their profits (dividends). The value of these fluctuates and does not guarantee you any return, but can potentially offer the highest out of any investment, so it is whether you want to take the risk. Or, if this is too speculative for you, bonds are the traditional alternative. There are different types (treasury, agency, corporate, depending on the institution you are buying them from) and they give you a fixed amount of interest on a fixed date. Here you are lending money to that institution, and they give you interest on that amount and eventually pay you back in full. This sounds quite scary so I have left it well alone, but as the results can be so rewarding, you may take your chances!
An ISA account is a savings account where the interest is tax exempt. You can opt for a stocks and shares ISA where you can invest your money in shares or investment funds with a limit of £11,280. Here you encounter the same risks as above, by dealing in the stock market. Or you can choose a cash ISA option which limits you to only 50% of this. Different accounts have different terms and conditions, so some may only offer you tax-exempt interest until you withdraw money, and permit you to transfer between accounts, while others do not. It is important to shop around and see which account works best for your needs. This is a valuable option if you are quite efficient with your money and know your financial stuff (this is not me!).
This is like a savings account with no regular interest, but acts as more of a lottery where every month cash prizes are drawn. You can win between £25 and £1 million, or nothing at all. This option is a bit more fun in that it's like a game, and the amount you pay in (multiples of £100 a time) stays the same regardless of how much you win, so you can withdraw it whenever you like without loss. Having had some of these for years I would recommend them as a safe option, but if you are anywhere near as unlucky as I am (I have only won £200 once in four years!), you may want to take the risk for a bigger return, or just invest as much as possible to increase your chances of a big win, without any chance of loss.
Letting a property is a big investment, but it also has a big return. Obviously it depends on just how big those savings are that you have, but with rent prices climbing very quickly you can expect a minimum of £1200 a month for a four bed house in certain areas, which is isn't bad is it! This does not necessarily have to be a huge hassle either, letting agents work as a go between for you and the tenants and it is their responsibility to manage the property, contracts and rent so you do not have to lift a finger if you do not want to! As popular as this is for many, it completely depends on just how much you have saved. For me, this one may have to wait a while!

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