Whether it’s a bonus or promotion, the sale of a property or business, pension encashment, inheritance or more, it’s common to ask how, why and where to invest. Need advice? Over to JM Finn’s Investment Director Andrew Cumming, who manages nearly £400million of bespoke investment portfolios on behalf of private clients – and is currently shortlisted for the Spear’s High Net Worth Wealth Manager of the Year Award 2025. www.jmfinn.com
What are the potential benefits of investing compared to saving in an account?
Potentially higher returns: Most bank savings’ accounts currently offer lower interest rates than the rate of inflation, so your money’s value will typically decline in real terms (i.e. factoring out the impact of inflation). Investing in assets such as equities and bonds may potentially provide higher returns over the long term, helping you preserve the real value and grow your wealth.
Diversification: Investing allows you to diversify across different types of assets, reducing the risk associated with having all your money held in cash. Diversification can help protect your wealth in case one investment performs poorly.
Income generation: Some investments, such as dividend paying stocks, can provide regular income. This can be especially beneficial if you want to supplement your existing income or enjoy a comfortable retirement.
Tax advantages: Depending on your jurisdiction and the type of investments you choose, there may be tax advantages to investing your lump sum. For example, certain pensions or tax efficient investment strategies can help reduce your tax liability.
Long term financial security: Investing a lump sum wisely can help contribute to your financial security and future needs such as buying a home, paying for education, or retiring comfortably.
Philanthropy and giving back: If you want to use your money to make a positive impact on society, investing can help grow your wealth over time, allowing you to contribute more to charitable causes or organisations that you care about.
What do I need to take into consideration when investing?
Investment objective: Understanding your objectives and risk tolerance help you make investment choices that align with your comfort level and financial goals: how long you would like to invest for and how much you could potentially lose will help drive the decision about what you invest in.
Avoid scam: Be cautious of investment offers that promise unrealistically high returns or seem too good to be true, always conducting thorough due diligence before investing.
Consider your goals: Investing may offer the potential for higher returns and wealth preservation compared to leaving the money in a bank account. However, it’s essential to carefully consider your financial goals and risk tolerance, and to seek professional guidance when making investment decisions if you are new to investing.
Disclaimer: Please note that the value of investments and the income from them can go down as well as up and investors may not get back the amount originally invested. The information in this article is for information purposes only and should not be considered a recommendation or solicitation to engage in investment activity.
