Investing in the current economic climate
Featured Products Promotional FeaturesPosted by: Dental Design 16th December 2022
It almost goes without saying that the vast majority of people are having to take a closer look at their finances right now. Combined pressure of the cost-of-living crisis, rising energy bills, rising inflation rates and more has meant that every penny counts. So, if you do have extra capital, how can you make sure that this money is working hardest for you?
Although the option is there to leave money in the bank, with interest rates remaining generally low for current accounts and ISAs at this time, one option for a more lucrative use of funds could be to invest. But is now a good time to deal in shares?
Always a gamble
It’s worth stating that any form of investment is always a gamble. Markets are, by nature, volatile, and so it’s always important to set the boundary of only ever investing money that you can afford to lose. This way you can avoid debt or any unnecessary difficulties and ensure that you are being sensible with your funds.
However, we can’t discount how lucrative the right investment can be, especially if you do have capital available. The gains on a good investment far outweigh what you can get from any bank account, and this means that if you can invest capital for a period such as five years, it is likely to be a profitable venture.
Is the time right?
The answer to this question is tricky. In many ways the myth about “waiting for the right time to invest” is exactly that – a myth. The market changes so quickly that it’s more about taking the plunge and hoping that luck will shine down on you. However, the time of investment will, of course, impact how much you pay for stocks.
At the time of writing, there has been significant sell off in the Financial Times Stock Exchange (FTSE 100), which usually indicates that the current time is not a good opportunity to invest. As a snapshot of the sort of activity we’re seeing, the value of stock plummeted by 7% between the 8th and 20th of June this year.[i]
On the flip side, however, there’s also the fact that buying up assets now could net you a bargain. In fact, many financial publications are recommending buying now as stocks are cheaper, and this activity could in fact turn out to be very profitable in the long-term.
So, if you do want to take the risk, what should you bear in mind?
Where to begin with investing
The actual process of buying stocks and shares is often more straightforward than you would think. A quick internet search or peruse of the financial pages of the press will reveal stock for sale, and the prices they are currently commanding. Once you’ve had a look, you can decide how much you’re willing to pay for the shares in question and put in an offer. If the offer is accepted then you will receive the shares and pay for them – almost like buying any other goods and services.
Where the process becomes complicated is that you can take multiple routes to achieve the above. For example, you could go to a stockbroker and have them perform the buying and selling for you. You could also proceed through a share-dealing service at your bank or building society. Shares can even be bought directly from the company selling them (in this situation you must apply to buy shares, so you’re not guaranteed to get the amount of shares you applied for if it’s popular stock). There are share shops to consider too – these establishments may have a link to a certain bank or building society or be completely independent.
The route that will work best for you will depend on your available time and the level of investments you want to make. For instance, doing investments in person is often beneficial, but it is also very time consuming, so passing on this responsibility to a broker is usually preferable if you have a hectic schedule. Stockbrokers can operate under different instructions, tailoring their services to your needs.
Execution only stockbrokers will only purchase and sell shares at a time and price that you’ve indicated. Advisory stockbrokers have more freedom, and will provide you with assistance and advice in buying and selling. Lastly, a Discretionary stockbroker has the power to buy and sell shares at will when they think it will result in the best deal for you.
A complex world that requires advice
As you can see just from this basic information, the stock market is a tricky labyrinth to navigate alone. It’s always worthwhile to invest in the services of Independent Financial Advisers, such as the award-winning team at money4dentists. This way, the experts can guide you toward wise investments, helping your money work harder for you.
For more information, please call 0845 345 5060 or 0754DENTIST.
Email info@money4dentists.com or visit www.money4dentists.com
Richard T Lishman
Managing Director of the 4dentists Group of companies
[i] The Times Money Mentor. Is Now A Good Time To Buy Stocks? Link: https://www.thetimes.co.uk/money-mentor/article/time-buy-stocks/ [Last accessed August 22].
