In the fourth episode of our ‘Practical Financial Planning’ season, Simon and Bex discuss Investing: what it is; why you might want to do it; and some principles you may wish to follow.
Some key points of interest covered in this episode include the following:
- Simon defines investment as something that has an ‘expected return’ and illustrates this comment by examining whether or not various purchases (eg a car or a house) and financial strategies (putting money in the bank, acquiring shares or buying gold) meet the terms of that definition. [02:13]
- In response to a question from Bex about why we might want to invest, Simon outlines the way in which inflation can reduce the spending power of our money. Investing is a good way to combat that issue, especially as the effect of compound interest on invested money is to cause it to grow by a greater amount year on year. [09:15]
- When considering the options for long term investing, the stock market can be a good option as long as you don’t try to ‘ride the wave’ and attempt to pick ‘winners’ all the time. [13:40]
- Simon describes four key steps that should give investors the best chance of getting a ‘good return’: (1) Pick an investment that gives you access to as much of the stock market as possible [19:05]; (2) Invest in index funds that cover as many countries as possible [20:01]; (3) Pick as low cost a fund as possible [20:30]; (4) Remember that you don't need to put all your money for investing into the Stock Market [21:18].
- As ever, please contact us via whereyourtreasureis@freerangepodcasting.co.uk, or on Instagram via @whereyourtreasureispodcast. After a fortnight’s break, we will be back with a couple of bonus episodes and will then resume our current seasons with Life Stage 5: Career Progression. [23:01]
This show has been brought to you by Free Range Podcasting.
