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A guide to supercharging your savings

With high street banks and building societies offering rock-bottom interest rates and little protection against inflation, perhaps it’s worth thinking about an alternative home for your money.

If you have an adventurous disposition and tolerance towards risk, there are various low to high risk investment strategies you may wish to consider, always remembering:

“The value of investments can go up as well as down. Past performance is not a guide to future performance” … a phrase you will have heard on many occasions and which appears in advertisements and financial literature throughout the financial services industry.

Of course you’d like a better return on your investment, but first it’s of vital importance that you understand your own Attitude towards Risk and Return (ATR):

Attitudes to investment risk can be defined using the following rules:

  • The greater the return you seek, the more risk you’ll usually have to accept
  • The more risk you take with your investments, the greater the chance of losing some or all of your initial investment (your capital).

AXA Self Investor is a new investment service from AXA for investment-savvy customers who have the confidence to make their own investment decisions, and here we outline-review some alternative investments you may wish to consider.

Government Bonds
British Government bonds are called Gilts. These Gilts are loans to the government which pays interest on its Gilt half yearly. Generally, Gilts represent an extremely safe form of investment, as governments are highly unlikely to default on their payments, but returns are not high.

Corporate Bonds
Bonds issued by corporations to raise money to expand their business. You loan money to a corporation, and in return they issue a bond which promises interest. You will have to accept more risk, but you’ll usually realise a better return.

Commodities
These are raw materials and agricultural products which can be traded, such as tea, coffee, iron ore, crude oil, gold, silver to name but a few. These materials have long time provided a hedge against inflation. With the emergence of China, India and Brazil, there is enormous demand for raw materials, and as these economise surge, this demand will grow, as will the value of the stock.

UK Equities
These are funds invested in shares in quoted UK companies. If the stock market is working in your favour there is the potential for high returns. There are also tax free options and long term investment possibilities, but the stock market always involves some risk and there are no guaranteed returns.

Stocks and Shares ISAs
This tax year, you can hold up to £11,280 in an ISA wrapper that allows you to take your returns free of income tax and capital gains tax. For many people this is the preferred way to invest in stocks and shares if you take a long term view on investment.
Within the ISA wrapper you can hold a wide range of investments, including unit trusts, open-ended investment companies, (OEICs), investment trusts, corporate bonds, and gilts.

Further details can be found at the AXA Self Investor website: http://www.axaselfinvestor.co.uk/

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