A £50,000 sum is a considerable amount for most people. High-interest loans, however, could eat away at it should it be kept as cash. Inflation could also manage to reduce its value a decade or two down the line. Finndon Group recommends against keeping funds uninvested or deposited in a regular fixed rate savings account. Its overall value is a proverbial “sitting duck” against such interest payments, inflation and the temptation to use it to purchase instantaneously depreciating consumer goods.
There are some steps that must be taken prior to making an actual investment. The firm provides step-by-step recommendations on how to apportion such amounts before making a commitment to place it into a wealth growth fund.
1. Settle Debts
Interest from credit cards, student loans, car loans or even housing mortgages must come first. They are unnecessary expenses for those that actually have money to pay for them outright. It is important, however, to check with the corresponding debtor if there are any overpayment charges before proceeding.
2. Establish an emergency fund
Finndon Group advises that investments should be made with the long-term in mind. This should be kept in for at least three years in order to give room for correction should the market experience any high degree of volatility. By creating an emergency fund of up to three to preferably six months, the value of a month’s salary, investors do not have to touch the funds invested should an immediate need arise.
3. Create a retirement fund
Unless there is already guaranteed income coming in the potential investor’s way in the form of Social Security, setting up a pension plan might be a good idea. This will help you cover additional expenses such as traveling, medical care, etc. Once created, it has the potential to take care of any expenses without affecting your investment funds.
4. Invest wisely
Should the previous three entries be adequately satisfied, a person will be in a favorable position to invest his/her money in order to generate wealth. Placing it into whatever fund that comes to mind however is ill-advised. It is important to consider investing in the long-term, in something that has a moderate amount of risk whilst still giving you a high return on your investment.
5. Diversified asset classes
The consultants at Finndon Group can point you in the right direction on how to spread out the £20,000 in the long-term. This could include listed or minibonds. Strategies with a return of investment well above the current Consumer Price Index of 1.2% are also an excellent choice of investment.