Nowadays, interest rates on bank accounts aren’t what they used to be. Although ISAs do still offer reasonable levels of interest rates, and you can save more than ever before, you still see relatively small levels of growth in interest, meaning that there’s comparatively little return on investment. As a direct result of this, people have started to look elsewhere when saving.
Premium bonds are loved by investors all over the UK because they’re risk free. Unlike a cash ISA, you don’t earn interest. Instead, you’re entered into regular prize draws where you could win up to £1,000,000.
Per £1 bond, the odds of winning £1,000,000 are 30,249,250,802, but you have to be in it to win it. You can also withdraw your money whenever you like. You buy £1 bonds and each one has an equal chance of winning. The amount of interest paid on everyone’s bond determines the amount of prize money available.
However, these days, premium bonds are less attractive because they’re not the only form of investment that’s tax free. With ISAs (which are also tax free), unlike premium bonds, you’re guaranteed interest. With premium bonds, you could end up with no extra.
Over the course of the past decade we’ve seen property prices surge in value. As a result, the buy-to-let market has developed, with people investing huge sums in property.
Of course, investing in property does have a number of associated risks. Firstly, you have to invest a large sum, so need to have a high amount of savings. Secondly, unlike ISAs and to a lesser extent premium bonds, there’s no guaranteed return on investment and, if the markets move in the opposite direction, you could lose money.
If you’re looking for an even better risk-reward strategy, then forex trading is the game for you.
With forex trading, you’re trading foreign currencies and using the exchange rate to your advantage in order to increase your money. There are several pros to this: it can be done in your spare time and won’t affect your job or way you work and you can also use as much or as little money as you like.
However, on the downside, forex trading is incredibly complicated and has a high level of associated risk. You can lose all of your investment and can lose more than your original stake. As a result, before you start trading, you should try a demo account like the one available from FX Pro.
In conclusion, there are a number of different investment types. The one that’s right for you is dependent on the level of risk you’d like to take. Each has pros and cons, so consider them all carefully.