Every new year ushers with it new resolutions and personal targets. For some of us, these might be related to starting to save a portion of the income we receive during the year in order to invest for our future.
In today’s scenario, depositing savings in a bank account rarely bears enough fruit, so we need to look at other options such as investments that can make our money work harder for us. It is a misconception that you need large sums of money to embark on an investment journey. Today’s financial products allow for smaller budgets – a solid portfolio can be built with as little as €50 per month.
One of the essential things to keep in mind is to apportion and spend your salary wisely. A percentage of your salary should go towards daily expenses, unexpected costs and short-term goals. Start by calculating these expenses and place a portion of your earnings to cover these expenses in a savings account. The remaining balance can be used for investment purposes.
Knowledge is power – start getting into the world of investments through knowledge acquisition. The internet offers a wealth of information. Acquired knowledge can better assist you in making better investment decisions. Most financial institutions offer advisory services through highly-skilled financial advisors who are trained and equipped with the necessary tools and updated information. Through one-to-one meetings, they can assess your risk profile, investment objectives and advise you on the investment that is most suited to your financial requirements.
If you have a small budget to invest, monthly investment plans, such as unit-linked or capital protected funds, could be a the most apt option. One of the plus sides of investing regularly through monthly investment plans is the benefit of cost–averaging. This lowers the risk of volatility by averaging costs of the investment units that you purchase over time.
Unit-linked monthly investment plans are based on collective investment schemes where money from a number of investors such as yourself, is pooled into a fund and invested by a fund manager according to the criteria of the specific fund.
The fund is divided into segments called ‘units’, similarly to shares. With your monthly €50, you will be pooling in alongside other investors like yourself, and you would be able to invest in various companies, sectors, assets and different geographical regions while providing you with immediate access to the expertise of investment professionals and diversification. This is made possible through the pooling of funds of many investors put together.
Capital protected monthly investment plans are mainly aimed at the longer-term investor. These plans can provide a number of investment guarantees, annual bonuses and have the added benefit of being tax-efficient.
The main aim of a capital protected investment plan is to provide steady, conservative returns while also offering valued assurances. It is a secure means of investment which offers a potential for growth while protecting your savings from short-term market volatility.
The crucial step with investments is getting started. The sooner you start, the quicker you can start building a lump sum for the future.
The complexities of markets and the terms and conditions related to these plans can be overwhelming to a new investor. It is therefore recommended to seek the services of a financial advisor who will provide you with a full picture of costs, fees, risks and possible returns.
Renee’ Marie Brincat, Portfolio Administrator, BOV Investment Centre