Find Financial Freedom

I read a lot of information about different sorts of investments, ranging from savings accounts to ISAs, to pension plans, to stocks and shares and property – but which type of investment is the best?

Well that depends on you, your age, your risk profile, your goals and most importantly, your understanding of investments.

Let’s take for example a young couple starting out in life, they have 40+ years ahead of them before retirement, their goal is to pay off their mortgage, have a similar income to what they have now in retirement and they don’t want to take any risks. They also don’t know anything about investing, and simply want to hand over their money to professionals and let them take care of it.

In this example, it would be wrong to suggest they look at anything other than ISA’s, pension plans and savings accounts. These can all be handled by an independent financial advisor and are all relatively risk free. Clearly as they get nearer retirement age, they should look to move their money out of ISA and pension funds that invest in the stock market and look to put the money into cash funds, but a good IFA will advise them to do this.

What can they expect in terms of a return? They can probably expect to do between 5% - 10% return averaged over the life of their investments, which with the effect of compounding should see them able to achieve their dreams.

What about an older couple who don’t just want to pay off the mortgage and retire at sixty five? What about a couple that want to retire young, say forty five? Following the same advice as the previous couple would not necessarily work, unless they were willing to invest a much larger proportion of their income – which if we assume that both couples have the same income, is not an option.

For a couple like this, they need a better strategy, a strategy that can deliver higher returns, consistently. So how can they achieve this? There are many ways they can achieve this, however the best thing for them to do would be to invest some of their own time in learning more about investing. Most independent financial advisors will not be able to help this couple, because most IFA’s will not achieve this goal for themselves, so how are they going to achieve it for a client? They won’t, simple as that.

For this couple, they will need to learn about investments that are more complicated than simply paying a direct debit each month. They will need to learn how to spot good investments themselves, which in itself will require learning what is good and what is not good.

In short, the best investment is to invest in yourself, increase your understanding of different investment types and make your own decisions. Don’t be afraid to take advice from people that have achieved your dream and expect plenty of people to try and dissuade you from doing anything other than the norm, including your financial advisor!

In fact, if your financial advisor doesn’t like the ideas you have, then get a new advisor that understands what you want to achieve and understands the methods you want to use to achieve your goals and is happy to help you achieve your goals.

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