Why invest?
Why invest rather than simply save?
Straightforward bank/building society deposit accounts are the ideal place for your savings and emergency money as they are convenient, easily accessible and safe. However, putting all of your money in low paying deposit accounts is not a good idea as the returns may be so low they do not even keep pace with inflation and so, over time will erode the value of your money.
Therefore, many people become investors with some of their money in order to benefit from the potential of increased returns offered by stock market linked alternatives. Please see the graph below for the effect of inflation on a £10,000 lump sum invested for 20 years.
It is an accepted fact that the growth in shares (and the dividends they produce) has historically exceeded the returns from fixed interest investments and cash deposits, even taking into account the ups and downs of the stock market.
Please note, all data referred to in this Guide has been provided by Lipper Hindsight. All returns indicated were achieved during economic conditions which may not be repeated in future. Therefore, past performance is not necessarily a guide to future returns.
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