With interest rates at historic lows, there is almost no reason to keep money in a savings account, aside from having emergency funds. With the current rate of inflation exceeding savings interest rates, if you have £1,000 saved, this time next year it will be worth less then than it is now IF you keep it in a savings account. This is why it is essential for people to improve their financial literacy and start putting their money in places where it will grow, not shrink. While banks are pretty much the safest places to hold money, retail banks are often far from the best places to put it if you want it to grow. We’ll look at the best medium-term investments available to everyone, as of today.
Specifically, the S&P 500 ETF. Whereas traditionally you would buy stock in a single company, nowadays a more popular option thanks to growth and security in the long term is to invest in ETF’s. An ETF is an “Exchange Traded Fund”, which is a security type that tracks indexes, sectors or assets. In short, it is a way of investing in multiple companies that are in a group, rather than putting all your eggs in one basket with one stock.
The S&P 500 has been steadily growing since its inception, and although it has had its ups and downs during that period, in the medium-to-long term, its gains have been unbeatable. This is one of the most solid pieces of investment you could make if you are willing to put your money away for a few years without touching it. Such ETFs cover business in a variety of industries, making and providing diverse products and services such as online clothing retailers, agriculture, finance and technology companies that build conference room displays. This variety spreads your risk and makes it an awesome longer-term investment.
At the moment, such investments are not for the faint-hearted. The cryptocurrency market is incredibly volatile and currencies have been known to halve in value in an instant. But when we are looking at a period of 5 years or more, you shouldn’t necessarily be checking on the value day-to-day as this would certainly be a rollercoaster of emotions. Instead, ideally, you would have a plan to put in money consistently regardless of the price at the time. This is called the “Dollar Cost Averaging” method. The majority of the big cryptocurrency such as Bitcoin and Ethereum have grown massively within this time frame, and have solidified their position in the industry, with plenty more growth seen to come. If you are looking to invest in the long term, cryptocurrency could provide you with the best returns – as long as you can hold your nerve.
Property has long been one of the most popular investments, in large part because they are tangible and have proved essential since forever. Its value is usually defined by supply and demand, and globally there is a shortage of housing. The biggest barrier to entry getting into property is the relatively large start-up cost, but if you are looking for a solid investment over 5 years, you will rarely go wrong with this.