Financial Gentleman
Now this difference may look small however
with larger amounts, plus with regular
monthly savings and time, this can make a
big difference to your growth.
sadly bad, this should still give you an
average return however only in the medium
to long term as the bad performing assets
needs time to recover.
I am now going to move slightly away from
short term savings and discuss very briefly
the benefits of saving in the medium to long
term versus the short term options.
The difference in this medium to long term
savings space is the level of access with be
heavily restricted depending on your
government rules, or even the asset class
you have chosen or decided to invest into,
an example of this is buying your home, it
takes time and lots of resource to buy your
first home and equally to sell, hence the
capital is not easily accessible.
When saving over a period of more than 5
years, one should move away from cash for
one reason, inflation, the purchasing power
of your capital is eroded because of
inflation. To give you a simple idea of how
inflation works, simply the cost of goods
today become more expensive in the future,
hence your capital must as a minimum keep
up with inflation running today at around
3%.
Hence putting your capital in a tax efficient
government backed allowance means your
growth is protected from the tax man.
Investing into a number of different asset
classes such as equities/bonds/mutual
funds/Exchange traded funds gives you a
diversified portfolio, or another way of
putting it some assets will do really well in
one year and other not too bad and some
30
Growth in the medium to long term can be
expected to look between 6-8% annually.
When looking to investing into this space
you have many do it your self-options
especially on line and given the new
generations of people having the ability to
access information easily using the world
wide web this area is forever expanding,
however I would still strongly
recommended speaking to a qualified
adviser to make sure you take full advantage
of any national tax breaks and knowledge is
as always power, especially if it’s coming
from someone that does financial planning
and creating wealth for a living.