Many people will have started 2022 by taking out a gym subscription or hiring a personal trainer – but setting resolutions for your financial health is equally important.
Investing is one of the best ways to make your money grow. Over time, the stock market has been the only place capital has consistently grown ahead of inflation.
Yet, many of us still do not know the best way to go about growing our cash. In our 20s and 30s we do not invest due to a lack of funds or a lack of knowledge.
In retirement, we become more cautious and avoid the best-returning investments. Many end up missing out on the best returns throughout their lives.
With the right plans, investing can be easy and can be done with only a small amount of savings. Telegraph Money gives 10 top tips for investors of all ages.
Smart uses for your money
1) Use an Isa or pension
Those under the age of 40 should look at the Lifetime Isa as a starting point as it includes a 25pc Government bonus. First-time buyers can use it for a house deposit and retirement savings, although you will be charged an effective 6.25pc penalty if you withdraw the money for any other reason, apart from a terminal illness.
However, for higher-rate taxpayers (earning more than £50,270 per year) investing via a self-invested personal pension –also known as a Sipp – is often the best option thanks to the tax relief.
For those saving for young children, or grandchildren, a Junior Isa is a logical option. Deciding which investment tools are right for your circumstances is crucial to long-term planning, as it will reduce the tax you pay in the future.
2) If you are young, take more risk
Those starting out should invest in the stock market and have broad exposure companies around the world.
You can do this by investing in a tracker fund – which follows an index like the FTSE 100 or the MSCI World – or you can spend time researching active funds and buying one run by a manager you think can beat the index.
Investing in higher risk parts of the world, including emerging markets and private equity, could provide higher rewards.
3) Explore all options and understand the language
Whether you decide to invest in a tracker fund that follows the market, or want to back an active manager that you hope will beat the market, investors should look at all the options available to them before making a decision.
People can invest in specific themes, like renewable energy or water sanitation, or ethical funds, which direct your money towards “good” companies.