Tips for keeping your money
So if you are keen to keep your hard earned cash working for you rather than lining someone else’s pockets, here are some tips from the freemarket team.
The first, and this may sound counter-intuitive, is take advice on your investments. The world of high finance is as complex and dynamic as it ever was, and it would be dangerous to suggest that anyone should go it entirely alone.
At the same time however, know what you are paying for. Brokers do now have to be a lot more transparent about their fee structures, though less so in currency exchange, where fees can be hidden in the exchange rate. In a balanced portfolio, you may pay more than you need to have lower risk assets managed, however. Make sure you get clear value out of expensive advice.
To enable this, do some of your own research, at least to understand what you are investing in. While you may not be confident to make investment decisions by yourself, a small amount of understanding can go a long way when it comes to asking the right questions of your advisors and making your investment decisions wisely.
In particular, you should be aware of any major changes to government or taxation policy. Both pensions and buy-to-let property markets have undergone significant modification in recent years, for example. You could be losing money simply by not moving from old to new models.
Equally, build a picture of how the market is evolving. The peer-to-peer FX model for example, takes advantage of direct transactions and eliminates costly intermediaries. Equally angel investments, loans and other financial mechanisms are adopting a P2P approach due to its effectiveness in reducing overheads.
Such information will mean you are better able to make the right choices when it comes to your investments, and hopefully keep more of your money in the process. In addition, it will reduce the risk of bad advice, helping you understand the difference between tax management and avoidance, and steer clear of advisors prepared to play fast and loose with both the rules and your money.
The bottom line is, in investments as in life, it pays to look before you leap. If you are investing your own money, also spend the time to understand what you are investing into, particularly in the areas of your portfolio identified as higher-risk. That fast car your IFA is driving won’t have been paid for by a lottery win, and if something sounds too good to be true, it probably is.