Okay, so you have a little money to invest. You may have been squirreling away cash year by year as you have been earning money from your job. Or you may have another source of funds, such as a buy-to-let property that has been yielding a regular income. Or you may have inherited a pot of money from a wealthy relative who has sadly passed away recently.
So what will you do with this stash of cash? Well, how about investing in shares?
So here are my five reasons to start investing NOW!
Bank accounts yield virtually nothing
It’s amazing how many times a rise in interest rates has been predicted over the past few years. Yet it never seems to materialise.
The Bank of England has kept rates frozen at 0.5% ever since the depths of the Great Recession. Falling supermarket, fuel and energy prices mean that there is no inflation, and with pay deals remaining restrained, I suspect interest rates will remain low for years to come.
We basically have to get used to a world of permanently low rates. Which means our saving accounts yield virtually nothing. So if you want a decent return on your money, you have to look beyond your bank or building society.
Buy-to-let is now heavily taxed
So many people have turned to property investments, and, in particular, buy-to-let. And, in the past, this has certainly been a money spinner for many landlords.
But recent tax changes have meant that this may no longer be the route to riches that many had hoped for. The abolition of mortgage tax relief on buy-to-let properties means that landlords will no longer be able to deduct mortgage interest from their rental income.
In simple terms, that means that if you have a buy-to-let mortgage, you will make a lot less money than you used to. So now, if you want to make big money from buy-to-let, the best route is to buy your property in cash – a luxury that many investors won’t have.
Shares are cheap, and dividend yields are high
Is that starting to make shares more appealing? Well, let’s take a closer look at the merits of equity investing.
Around the world, stock markets look cheap. The FTSE 100 currently stands at 6333, nearly ten percent below the 6930 high it reached some sixteen years ago. It is also remarkable to note that the world’s most dynamic economy, China, has one of the cheapest stock markets in the world.
There are a bevvy of companies with juicy dividend yields: GlaxoSmithKline yields 5.91%. Bank of Georgia has an income of 3.73%. And Diageo returns 2.78%. All three yields beat anything you can get from your savings account.
China and India’s consumers are starting to spend
The opening up of emerging markets over the past two decades has been perhaps the greatest change to take place in the world. And it has changed the game in investing. No longer can you focus all your attention just on the FTSE 100. As hundreds of millions of consumers in China and India start to spend, you need to invest in companies that will take advantage of that boom, both in the UK and abroad.
That’s why it makes a lot of sense to add a Far Eastern, Chinese or Indian investment fund to your portfolio.
We are on the verge of a huge global bull market
Ever since the turn of the century, we have been mired in a global bear market in stocks. But I firmly believe that this will soon turn into a global bull market. The most successful investors will be the ones who buy into this bull market early, and stick with their convictions. But stock markets are all about momentum. And it will take years for momentum to turn our current malaise into optimism and eventually boom.
So I think now, and the next few years, is the ideal time to begin assembling a portfolio of stocks and funds, as the next great bull market gradually builds.
