personal investments

Anyone who is lucky enough to find themselves in receipt of a cash lump sum will have the joy of deciding where to invest their windfall for optimum returns.

Whilst most people envy the idea of having a large sum of money to invest, this situation also involves making a huge decision that can, in itself, be a very nerve-wracking experience.

What Personal Investment Opportunities Are There?

With such a wide range of personal investment opportunities, it can be hard to know where to start.

Investments fall into two broad categories, investment for income and investment for growth. Investment for income is simply a way of turning your lump sum into regular payments, usually on a monthly or yearly basis. Investment for capital growth is a way of increasing your lump sum, over time.

Many investments offer a combination of both, i.e. both income and growth; however, the exact split can vary considerably.

What Should I Consider When Making Investments?

As a general rule, the higher the risk the greater the potential return; for example, if you place a large amount of money into risky stocks and shares on the stock market you may find that you gain a huge return.

The downside with stocks is that you run a greater risk of losing everything. An important consideration, therefore, is to decide how much you are prepared to risk and what sort of return you hope to achieve.

Another key issue is to decide how long you wish to leave your investment ’growing’. As a general rule, if you want easy access to your cash, you will have to accept a lower return.

Tax Issues to Consider When Investing

Tax can be a fundamental issue when it comes to personal investment. With a few exceptions, most investment income or capital growth will be taxable.

For instance, if you invest in a second property and then sell at a later date, you will, normally, be charged capital gains tax. Tax planning can be extremely complicated so if you are investing large sums, it really pays to obtain professional tax advice.

The government now offers reliable investment opportunities that are tax efficient, in the form of Individual Savings Accounts (ISAs). Contact your bank or financial planner for further information.

If you are lucky enough to be able to make personal investments, decide exactly what you hope to achieve and shop around for the best deal.

Personal Investments