The Pros And Cons Of Investments As Banking Or Pension Alternatives.



Posted on: 4th March 2015

Now more than ever before, UK citizens are being steered in the way of investments and investment savings accounts as alternatives to standard bank accounts and pension plans.

On paper it’s a simple and wholly attractive principle – rather than sitting in a pot somewhere and doing next to nothing, the money is invested with intent of bringing home a healthy return.

Of course, as is the case with any such financial strategy however there are both pros and cons to take into account.

It’s common to hear certain IFAs swearing by investments as the only way to go, while others will insist that you’d be better off steering clear of them at all costs. The truth however lies somewhere down the middle as while the potential for great things is indeed there, it can never be 100% guaranteed.

Advantages of Investing

In terms of the advantages of going ahead with an investment scheme, the biggest and most obvious of all is of course that of potentially taking home excellent returns. If the investment pays off, there’s every chance you could earn exponentially more than any bank account or pension scheme could ever bring you. In addition, there’s also a good degree of flexibility in most instances which means you can invest as much or as little money as you can afford to.

As far as the actual terms of the investment go, it’s not always necessary to invest long term and so there are chances to make good returns over comparatively short periods of time. It’s a way of saving your money tax fees, plus with the help of the industry’s best investment managers looking after things, you personally don’t have to know the first thing about investing.

What’s more, you can spread your bets evenly across a wide range of investment opportunities which means that even if one or more don’t quite perform as well as expected, chances are the others still might.

Disadvantages of Investing.

Moving onto the drawbacks now, perhaps the biggest concern of all stems from the fact that in most cases you will have absolutely no guarantee whatsoever of any returns at all. If the investment goes south, you could lose everything you put into it. What’s more, there may be additional costs added to the investment that aren’t apparent on the surface, ranging from investment manager fees to property maintenance costs and all manner of others.

Investing long-term can also be slightly disconcerting for some as you never know what the future may bring for any given market, plus if you agree to invest long-term you may not be granted access to any of your money in the interim years or decades.

In Summary…

On the whole therefore, it’s a pretty balanced picture illustrating the importance of entering into such options only under the guidance of a professional and wholly independent financial advisor. It just isn’t worth taking chances without knowing what you’re doing, but get it right and the rewards could be rich indeed.