Why Should I Keep Investing?

With the proper financial strategies, you can maximise the value of the money you earn and achieve greater stability by investing. Even if you are having difficulties at present, you can make the most of your income by storing away a certain percentage each month in a savings account that has investment potential. Building your resources can prepare you for emergencies that might otherwise require using high interest credit cards or careful debt management.

Maximising Your Savings

Making room in your budget for savings and investments is an important step in rebuilding your finances. Many consumers get into debt because they turn to personal loans or credit accounts to cover basic expenses. If they fall behind in their repayments, late fees and high interest charges can quickly make these debts insurmountable. Investing a certain percentage of your income allows your money to grow as you prepare for your future needs.

If you are living on a tight budget, investing in stable, secure funds may be the most effective way to maximise your income without taking excessive risks. Individual Savings Accounts, or ISAs, are popular, tax advantaged accounts that allow account holders to set aside money for short term or long term needs. The interest, dividends and bonuses earned from ISAs are not subject to income tax, but contributions are limited to a maximum amount each year.

Not all ISAs have equal investment potential. A cash ISA grows through the interest that you earn on the contributions you make to your savings account. A stocks and shares ISA earns through profits on your investments as well as interest earned on the balance in your account. Whilst a stocks and shares ISA is a riskier option, account holders have the potential to earn higher returns on their investments. If necessary, the funds in an ISA may be withdrawn to cover emergencies or repay your creditors.

Child Trust Funds, or CTFs, are tax free funds that encourage families to set aside money for their children’s future. As with ISAs, different types of CTFs offer different levels of earning potential and financial risk. Investment CTFs and ISAs allow your funds to accrue at a higher rate, preparing you and your family for a more stable financial life in the years ahead.

Investing and Debt Management

If you are participating in a debt management plan, you may have limited funds available for investing. In a debt management programme, your budget is carefully planned to allow you to make scheduled repayments on your unsecured debts. Once all of your basic living expenses and debt repayments have been accounted for, you may have only a small sum of money to contribute to savings or investment accounts each month.

Any contributions that you make to an investment account will gradually increase the value of this fund. Over time, the funds you deposit in these accounts will increase your net worth and give you greater financial stability. If you receive a bonus at work or a gift of cash, consider investing in a fixed rate account. Fixed rate accounts, or bonds, accrue interest at a guaranteed rate for a set period of time, ranging from several months to several years. Until the bond matures, you may not withdraw funds without incurring a substantial penalty.

Continuing with your investment strategies as you improve your finances may help you to make a faster recovery. Although you should not invest at the expense of your current financial status, building a reserve for the coming years will give you greater confidence about the future. Arrange a consultation with a reliable investment advisor to develop an effective strategy for your specific circumstances.

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