Investing is an alien concept for a lot of people – it’s for white-haired, pin-striped-suit wearing men isn’t it?
It’s only if you have money?
Investing is boring and complicated.
It’s for o-l-d people.
Well I can categorically say that ALL of those statements are NOT TRUE. The quicker you realise this, the better it will be for your long-term wealth.
Why Should We Invest?
While we’re still fretting about our day-to-day expenses, we’re FORGETTING about our futures. Time goes by very quickly, and money needs time to grow. So the LESS time you have, the HARDER you need to work and the LONGER you need to work to make sure your retirement is covered.
If you are in a workplace pension, then you already invest. The only way that money beats inflation is by putting it into stocks and shares and other types of investments. Our workplace pension providers are putting our money onto the stock market with the aim of growing our pots large enough, so that one day we can retire with enough to be able to enjoy life.
But are you contributing enough? Ideally, you need to be putting away 10-20% of your income into some kind of reputable investment EVERY YEAR (more the closer you are to retirement). This could be your pension, but most of us will need to boost it with our own investment efforts.
The problem is that confidence is generally low when it comes to investing in the stock market. I wanted to find out why.
Feedback From Women In My Community
I asked women in my community about what was stopping them from investing. Money and lack of knowledge were obvious reasons (FYI – if you want to learn more about how to fit investing EASILY into your life, then you need to check out this link). One reason that really struck me though was a concern about investing ethically.
And this got me thinking.
For many women, putting money into worthwhile causes was so important to them that they’d rather not invest at all for fear of giving money to non-ethical investments.
This means that the traditional investment landscape NEEDS TO CHANGE.
What Are Traditional Investments?
Index trackers and exchange traded funds are collections of shares of many different companies that you can purchase in one go. They are low-cost, efficient ways to invest, and once you know the rules, they’re pretty easy too.
The problem is, many of these funds contain a number of companies in sectors that put people off. According to shareprices.com these include areas like mining, oil and gas, tobacco, aerospace and defense.
The idea behind index trackers like the FTSE 100 or FTSE 250, is that you are tracking the highest performing companies on the stock market. If this happens to be oil, gas, tobacco etc, then they will be included. Either you accept this, or you need to seek out alternatives. Thankfully there are options developing out there.
What’s Out There Now?
As with picking regular-type investments, you need to keep an eye on fees and pick funds that are as low cost as possible. You may find that ethical-type investments carry higher fees than what you have seen. This is presumably because demand is growing, but not mainstream yet, plus you’ll have fund-managers who are actively picking what they put into a fund, and this costs money (FYI – yours).
This is Money, have an interesting article about some funds and bonds that are looking at ethical companies. Take a look at their fact sheets and check out the fund ongoing changes. They are expensive by comparison of say, the FTSE 250 (0.85-1% per annum vs. 0.09%-0.18% respectively), but you may want to forgo this in exchange of knowing you are investing in socially conscious enterprises – it just depends on your preference and as long as you are making the conscious decision.
No doubt as the demand for ethical investing continues, there will be more and more low cost options developing. Hargreaves Lansdown has a list of funds that you could do some research into to assist you with picking ethical options.
You could also look at Triodos Bank – a platform offering ethical funds and peer-to-peer lending options.
What Else Is Out There?
Well I’m glad you asked…..I have recently been using a NEW feature on a robo-app called Plum (affiliate link). Plum started life as a handy savings-app. You link it to your bank account, and then every few days, plum will withdraw a little bit of money for you and save it in a protected e-wallet. Mine is being used as a holiday fund.
They are now also allowing you to INVEST some of your savings. The options you can pick from include a purely ethical fund. You could also choose an emerging market fund and/or a tech fund. This is still in a kind-of beta phase at the moment, so you have to apply to the app to be given an investment account (and there is a waiting list). It’s exciting to be part of something so new though!
Plum’s funds are slightly more expensive because you can start investing from as little as £1 per month. But you need to ensure that more than £1 is going in, because in addition to the fund ongoing charges, they will be charging £1 per month to use their platform. It won’t be a very effective investment if you don’t put in enough! The £1 fee currently doesn’t apply, but I have been told that this will change.
Now one of the things I noticed is that plum currently does not show full details about exactly WHAT is included in these funds. When I enquired about this, I was told that it would eventually become available, but because they are still in the early phases of this technology, they don’t have everything up and running fully just yet – so watch this space I guess!
If you’re going to start investing, the best thing is to use money that you won’t need immediately, because as I have already said, you need to give it TIME to work. Withdrawing money too soon will stop it’s ability to provide for you in the future.
You also need to be aware that as with any form of investing, your money can go up as well as down, so READ everything before you start.
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