Latest news with #Isas
The Independent
2 days ago
- Business
- The Independent
How much risk is too much risk when it comes to your money?
SPONSORED BY TRADING 212 The Independent Money channel is brought to you by Trading 212. In investing, the general rule is that the more risk you take, the greater the potential rewards. But the stock market can go down as well as up, and the idea of losing money is never pleasant. That's why so many Brits put their money into cash savings rather than the stock market. According to latest figures from the Office for National Statistics, more than 8 million of the 12.4 million Isas opened in 2022-23 were cash accounts. But to give your money the best chance of growing over the long-term, you'll need to invest it - and that means taking a degree of risk. The question is: how much? You're already taking risk - but the wrong sort It is easy to assume that leaving cash in the bank is completely safe, but this is a fallacy. As inflation pushes up the cost of living, the 'real terms' value of cash - its purchasing power - is eroded away. If inflation is 4 per cent then something that costs £100 today, will cost £104 next year, so your £100 in the bank could no longer afford it. The key is to make sure your money is growing at a faster rate than inflation so your wealth keeps pace with the rising cost of living. Research shows that investing in the stock market is the most reliable way to do this over the long-term. According to the Barclays Equity Gilt Study, which looks at data going back to 1899, investing in equities has delivered annualised returns of 6.8 per cent over the past decade after factoring in inflation, while cash has lost 1 per cent a year. Over 50 years, the stock market has delivered annual returns of 8.1 per cent compared to just 0.6 per cent for cash. Meanwhile, research by IG Group found that someone who had maxed out their Isa allowance every year since 1999 would have £275,659 today in real terms if they had put it in cash - but £410,051 if they had invested it in the FTSE 100. 'If you don't take enough risk for long-term financial goals, such as retirement, you may end up with a much smaller pot,' says Craig Rickman from the wealth manager interactive investor. Fear of losing money is a key reason so many savers are reluctant to invest. But risk is different to 'risky'. Many people associate the idea of 'financial risk' with 'gambling', but this is not necessarily the case. Risky is the chance of losing some or all of your money in the hope of big gains (think: putting it all on red at the casino). Risk, on the other hand, is the potential for ups and downs along the way, known as volatility. This is what we see on the stock market: it tends to rise over the long-term, with short-term dips along the way. As long as you don't need to access your money during a dip, you can ride this out in the hope of greater gains in the future. Younger investors in particular are often told to take more risk because they have more time to wait out those ups and downs. Claire Exley, head of financial advice and guidance at Nutmeg, says: 'What matters really is the value of your investment when you need the money, rather than the movements in value along the way.' Investors need to weigh up how much risk they need to take to generate the returns they hope to achieve, while still being able to sleep at night during those market dips. However, it is also important to pay attention to your gut instincts; some people are naturally more risk averse and won't be comfortable with any volatility, regardless of what the data shows. What to invest in Diversification is key to a smooth investment journey, especially for those just starting out. This means spreading your money across different companies, countries and assets. A broad global tracker fund, which invests in thousands of companies across the globe for a low cost, is a good place to start. To further spread your risk, you can add in different 'asset classes' (types of investment), such as bonds, gold or property. Many investing apps, such as Moneyfarm, Nutmeg, Dodl and Wealthify offer readymade portfolios that create an appropriate mix of investments, which is a good option if you don't feel confident choosing your own. Free risk questionnaires can help you determine your risk tolerance. These ask questions such as how long you plan to invest, whether you would describe yourself as a cautious person, and how you would feel about short-term fluctuations. Nutmeg, an investing app, said the average risk level for investors aged 18 to 29 is seven out of 10. This portfolio has 71 per cent in equities, 26 per cent in bonds and 3 per cent in cash - it has returned 71 per cent over the past 10 years. That compares to 22.2 per cent for Nutmeg's Level 3 portfolio and 120 per cent for Level 10. Before you start investing, experts typically advise having three to six months' of outgoings in an easy-access account in case of an emergency. Investing should be for a minimum of three to five years, so don't invest money you might need to access. Rickman says: 'Ultimately, risk appetite is a personal thing. Some people are happy to stomach heavy falls in value for the potential to make more money, and others are more cautious, favouring security and certainty over big potential returns.'
Telegraph
6 days ago
- Business
- Telegraph
‘I'm a vet with £150k in cash, but can't afford to buy a house'
Receive personalised tips on how to improve your financial situation, for free. Here's how to apply or fill in the form below. It's been almost three decades since Jessica May received the advice that would shape her life forever. Although aged just nine at the time, she still vividly recalls her mother's sage words: 'Do something that you love.' Growing up on a Herefordshire farm, it didn't take much soul searching to find the answer. May says: 'I thought, 'I love animals, and I have spent my childhood with animals'. I just decided I'd be a vet there and then.' Now aged 37, she's already 14 years into the profession she loves – but wants to know if it has set her in good financial stead to achieve her home-buying goals. May started out as an equine vet in a journey that took her from Kent to Hong Kong, picking up useful knowledge about the horse racing industry along the way. She's now back in the UK, immersing herself in the emerging technology that's revolutionising an age-old profession. She says: 'I'm in my third startup, which is a very exciting vet diagnostics company. There's a lot of innovation going on.' With a fulfilling career secured, May's attention has now turned to planning for the future. In addition to buying a house, she'd like to put enough money away to retire – even though she's not convinced she'll ever want to stop working. 'I don't really plan to retire, but I'd like the option and the financial security if I was forced to for some reason,' she says. 'I volunteer as a careers mentor and a vet for the Riding for the Disabled Association. I will fill my time doing something.' She's already made significant progress financially, with around £150,000 put away in savings and investments. Some is held in Isas, including £12,000 in a Help to Buy Isa, with another substantial sum sitting in a savings account. She also has around £15,000 invested in whisky despite having no interest in drinking it. Notwithstanding her level of savings, May is still finding it difficult to reach either of her financial goals. She says: 'I have looked at buying a house many times over the years, but I don't think it's actually affordable. That's obviously a bit of a pain point for me.
South Wales Guardian
15-07-2025
- Business
- South Wales Guardian
Key points from Rachel Reeves's Leeds reforms
The measures include reforming key banking rules, cutting red tape in the City, and getting more people moving cash out of savings and into stocks and shares. The Chancellor said the 'Leeds reforms', unveiled in the West Yorkshire city, 'represent the widest set of reforms to financial services for more than a decade'. These are the key points in the package of measures unveiled by the Treasury. The key measures for individuals: – A new advertising campaign will highlight the benefits of investing to individual consumers. Major banks and financial firms including including Barclays, Lloyds, Vanguard and Hargreaves Lansdown have agreed to take part in the campaign to help spread awareness. – Banks will be able to offer a new type of help called 'targeted support' from April next year. This means they can alert customers about specific investment opportunities, in hopes it will encourage groups of people with cash sitting in low-return current accounts to move it into stocks and shares. – Risk warnings on investment products will come under a review to ensure people can make accurate judgements about risk levels – potentially opening the door to some warnings being watered down. – Long term asset funds will be allowed to be held in stocks and shares Isas next year. Susannah Streeter, head of money and markets for Hargreaves Lansdown, said the change will 'open up far more investment' because it means cash can go into private assets and infrastructure projects, which currently are not allowed to be in mainstream Isas. – The Government will continue to consider reforms to Isas and savings to strike the right balance between cash savings and investment. The key measures for banks and building societies: – Looser lending rules will allow banks and building societies to offer more mortgages at 4.5 times a buyer's income, which is expected to mean thousands more loans become available for first-time buyers. – The bank ring-fencing regime, which separates banks' retail banking from their investment and international banking activities, will be reformed. – The Bank of England has raised the threshold at which smaller and mid-sized banks have to start holding emergency funding. Easing capital requirements is expected to help smaller banks scale up by freeing up more money for lending and investment. The key measures for the City:– The UK's Financial Ombudsman Service – which settles complaints between consumers and businesses – will be modernised and simplified and decisions will be more aligned with the financial regulator. – Plans to ease rules around senior manager appointments will be sped up, reducing the number of roles that are subject to regulatory approval. The regime was introduced after the 2008 financial crisis to make individuals more accountable for their conduct and any problems that arise under their watch. – Consumer Duty, a set of rules which set higher standards of consumer protection, will be reviewed by the UK's financial regulator over how it applies to investment banks and asset managers.
Leader Live
15-07-2025
- Business
- Leader Live
Key points from Rachel Reeves's Leeds reforms
The measures include reforming key banking rules, cutting red tape in the City, and getting more people moving cash out of savings and into stocks and shares. The Chancellor said the 'Leeds reforms', unveiled in the West Yorkshire city, 'represent the widest set of reforms to financial services for more than a decade'. These are the key points in the package of measures unveiled by the Treasury. The key measures for individuals: – A new advertising campaign will highlight the benefits of investing to individual consumers. Major banks and financial firms including including Barclays, Lloyds, Vanguard and Hargreaves Lansdown have agreed to take part in the campaign to help spread awareness. – Banks will be able to offer a new type of help called 'targeted support' from April next year. This means they can alert customers about specific investment opportunities, in hopes it will encourage groups of people with cash sitting in low-return current accounts to move it into stocks and shares. – Risk warnings on investment products will come under a review to ensure people can make accurate judgements about risk levels – potentially opening the door to some warnings being watered down. – Long term asset funds will be allowed to be held in stocks and shares Isas next year. Susannah Streeter, head of money and markets for Hargreaves Lansdown, said the change will 'open up far more investment' because it means cash can go into private assets and infrastructure projects, which currently are not allowed to be in mainstream Isas. – The Government will continue to consider reforms to Isas and savings to strike the right balance between cash savings and investment. The key measures for banks and building societies: – Looser lending rules will allow banks and building societies to offer more mortgages at 4.5 times a buyer's income, which is expected to mean thousands more loans become available for first-time buyers. – The bank ring-fencing regime, which separates banks' retail banking from their investment and international banking activities, will be reformed. – The Bank of England has raised the threshold at which smaller and mid-sized banks have to start holding emergency funding. Easing capital requirements is expected to help smaller banks scale up by freeing up more money for lending and investment. The key measures for the City:– The UK's Financial Ombudsman Service – which settles complaints between consumers and businesses – will be modernised and simplified and decisions will be more aligned with the financial regulator. – Plans to ease rules around senior manager appointments will be sped up, reducing the number of roles that are subject to regulatory approval. The regime was introduced after the 2008 financial crisis to make individuals more accountable for their conduct and any problems that arise under their watch. – Consumer Duty, a set of rules which set higher standards of consumer protection, will be reviewed by the UK's financial regulator over how it applies to investment banks and asset managers.
North Wales Chronicle
15-07-2025
- Business
- North Wales Chronicle
Key points from Rachel Reeves's Leeds reforms
The measures include reforming key banking rules, cutting red tape in the City, and getting more people moving cash out of savings and into stocks and shares. The Chancellor said the 'Leeds reforms', unveiled in the West Yorkshire city, 'represent the widest set of reforms to financial services for more than a decade'. These are the key points in the package of measures unveiled by the Treasury. The key measures for individuals: – A new advertising campaign will highlight the benefits of investing to individual consumers. Major banks and financial firms including including Barclays, Lloyds, Vanguard and Hargreaves Lansdown have agreed to take part in the campaign to help spread awareness. – Banks will be able to offer a new type of help called 'targeted support' from April next year. This means they can alert customers about specific investment opportunities, in hopes it will encourage groups of people with cash sitting in low-return current accounts to move it into stocks and shares. – Risk warnings on investment products will come under a review to ensure people can make accurate judgements about risk levels – potentially opening the door to some warnings being watered down. – Long term asset funds will be allowed to be held in stocks and shares Isas next year. Susannah Streeter, head of money and markets for Hargreaves Lansdown, said the change will 'open up far more investment' because it means cash can go into private assets and infrastructure projects, which currently are not allowed to be in mainstream Isas. – The Government will continue to consider reforms to Isas and savings to strike the right balance between cash savings and investment. The key measures for banks and building societies: – Looser lending rules will allow banks and building societies to offer more mortgages at 4.5 times a buyer's income, which is expected to mean thousands more loans become available for first-time buyers. – The bank ring-fencing regime, which separates banks' retail banking from their investment and international banking activities, will be reformed. – The Bank of England has raised the threshold at which smaller and mid-sized banks have to start holding emergency funding. Easing capital requirements is expected to help smaller banks scale up by freeing up more money for lending and investment. The key measures for the City:– The UK's Financial Ombudsman Service – which settles complaints between consumers and businesses – will be modernised and simplified and decisions will be more aligned with the financial regulator. – Plans to ease rules around senior manager appointments will be sped up, reducing the number of roles that are subject to regulatory approval. The regime was introduced after the 2008 financial crisis to make individuals more accountable for their conduct and any problems that arise under their watch. – Consumer Duty, a set of rules which set higher standards of consumer protection, will be reviewed by the UK's financial regulator over how it applies to investment banks and asset managers.
