Investments

The 2nd part of investment is how to make a sufficiently higher rate of return on your money than sticking it under the bed - in the climate between October 2008 and July 2009, this may well have been one of the best investment ideas.

So, to start off where can you put your money:-

1. Cash
2. Stocks (Shares of companies)
3. Unit Trusts
4. Investment Trusts
5. Pensions
6. Corporate Bonds i.e. lending money to companies
7. Treasury Bonds (gilts) i.e. lending money to a government
8. Fixed Term Bonds i.e. lending money to banks
9. Derivatives (category which encompasses a broad range of investments derived from investing directly in a company).
10. Venture capital i.e investing in startup companies
11. Foreign Exchange
12. Property

Each of these investments has different levels of risks and historical rates of returns. I'll start today by looking at cash, which is where the majority of people's money goes to.

There are many sites out there which will tell you the best place to locate your cash saving. http://www.moneysupermarket.com/savings/ is one site which I use. With savings, you need to not only look at what the current rate of return will be but also read the small print to check that the interest rate isn't just a taster rate i.e. a rate that will only be offered for a few months. Most experts say that you should keep enough cash in available savings accounts to last you for 6 months of unemployment, so if you don't have this level of savings already, I wouldn't recommend examining other investment opportunities until you've done this, otherwise you may find yourself unemployed with no savings and having to finance your lifestyle on benefits and debt (which is a very expensive option). Some accounts are very complex to operate. For example, I opened a savings account once and they sent me about 6 different pin numbers for 2 linked accounts - a current account (which I didn't want) and a savings account (which I did) and with a direct debit automatically opened to move money from the current account to the savings account. The interest rate was impressive but the website was so difficult to use that I never managed to work out how to deposit money in to the current account, the direct debit kicked in and I found myself in the situation where A&L where demanding I pay £60 to close my account, even though I'd never actually used it. They climbed down in the end, but these are the kinds of pitfalls that you might encounter.

Not all of the best interest rates appear on 1 comparison website, so you should read the sunday newspapers and keep an eye out on rates advertised in the bank branches for other opportunities to grow your cash savings. For current accounts, again you can look at comparison websites but most current accounts don't pay much in the way of interest so keep as little as possible in there. I generally maintain about a week's worth of money in my current account. What you really want to go for with a current account is the range of services which go with it. e.g.

1. How much will you pay if you go in to overdraft
2. What is the size of the free overdraft limit on offer
3. Do they offer a linked credit card or savings account
4. How long does it take for electronic payments to be transferred from/to the account
5. How much will you pay in transaction charges when abroad
6. If you're a young person what additional offers do they do e.g. movie tickets, money back etc. Be careful that these offers aren't being funded by higher charges, however.