What is investing?

The quick version: spending your money on something you hope will make money later. The slightly longer version: investing your money in investment products for a certain period of time with the expectation that they will become worth more later and provide you with a return.

In a nutshell: your savings are losing value. If the interest earned on your savings is limited and inflation is making life more expensive, the same money is able to buy less and less as the years go by. Everything is getting more expensive faster than interest rates can keep up. Saving is always a smart move, but it’s most useful as a reserve for unexpected situations.

Investing, meanwhile, lets you potentially use your money to make more money. If we compare it to cycling, then saving is like a safe city bike and investing like an agile racing bike. One will get your money from A to B and not much else, while the other involves a bit more risk but can let your money really take off.

There are several investment products available. Some require a little more knowledge, while others involve more risks and costs . Some of the most common options include:

• Shares: you buy part of a company. A share is a portion of a company, and by investing in shares, you become a shareholder (and therefore co-owner) of that company.
  
• Bonds: you lend money, and the proof of that is called a bond. The interest rate and term are set out in advance. Once the term has passed, you usually get your money back, and in the meantime you’ve been earning interest. Corporate bonds are issued by a company, while government bonds are issued by a country. It’s also possible to lend money to a bank, which is called a savings certificate.
• Investment funds: you invest in a variety of financial products including shares and bonds. Bundling different types together like this means that you’re not dependent on the results of one sector or company. Professional fund managers are constantly monitoring and making adjustments.
• Investment-type insurance: this combines life insurance with an investment in one or more funds. In other words, you build up capital through investments and this is (eventually) paid out to your heirs.

You can get started by yourself or rely on advice from our experts. They can assess which options are suitable for you based on your situation and preferences. If you want to start investing, we’re happy to help you get started with accessible options such as spare change investing or an investment plan.