Inflation in the UK at the moment is 9.4% (as at August 2022). The best-paying easy-access bank account offers an interest rate of 1.56%. Yes, you read that correctly. Any money that you currently hold in savings is losing value by the day. Scary right?
So if you want your retirement/holiday/university/super yacht fund to grow faster than the soaring cost of living, you might want to consider beating inflation by investing your money in property.
Why Property?
Historically, investing in markets such as shares has been the most reliable way to grow a long term savings fund.
Investing in shares is accessible to a lot of people, you can start with just a few pounds and if you do your research, it is relatively low risk. However, it can take a long time to build that pot and depending on where you invest, your money could be tied up for the full term, usually around 5 years.
This isn’t the case with property, especially if you choose to invest with someone like us. With investments starting at just £5,000, you can make a relatively small investment and know that after a fixed period of time (6,9 or 12 months), you will get all of your money back, plus interest, with zero risk.
If you choose a more hands on approach and build your own portfolio, the cash injection needed will be higher and you do shoulder any risk yourself.
The key to mitigating this risk?
Diversify
Back to the age-old saying “Don’t put all of your eggs in one basket”. It’s the same with a property portfolio. Even if you’ve got a simple strategy that’s working really well for you whether that’s buy to let, BRRR, HMOs, serviced accommodation, it’s good to make sure that you have a mix of assets and strategies across your portfolio. Legislation changes, tax changes and demand can all fluctuate. If you can offset this within your own portfolio, then your risk is significantly lowered.
Still haven’t decided on where to start and how to choose the right strategy for you? Read our top tips here.
Think Ahead
Most financial advisers will typically recommend investing in shares for at least 5 years. The time frames with property are much more flexible. You can sell some of your portfolio if you need a cash injection, or if you’re choosing to invest with someone like us, you’ll always know the date that your money will be coming back to you.
Think about your 5 year plan or any milestones that you might need to plan ahead for. Whether you’re building your own portfolio or taking the hands-off approach, you’ll need to plan your cash investment around your future.
Hold onto some “Mad Money”
As we know, the interest rates on cash savings are incredibly low but it is really important to set some money aside for emergencies.
If you invest every last penny, you might be forced to cash in on some of your assets when it’s not optimal to do so.
The general recommendation is to hold onto enough money to cover your outgoings for 6 months.
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