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4 Ways to Invest Your Money & Factors to Consider

4 Ways to Invest Your Money & Factors to Consider

Contributed by: @YemiAwop

Everyone’s attitude differs towards investments. If you are like me you’d get excited at the opportunity for a ticket to financial freedom as you effectively send your money to the gym. But perhaps you’re more reluctant to put your money into a “scheme” which may cause it to vanish overnight or maybe you’re unsure on how to invest and what it truly means to be an investor.

Some imagine investors a person with the Midas touch, someone who knows their way around the complexities of the finance world using clear judgement and slick manoeuvres to profit under pressure. The reality is investors can be just like you and I without the need to know the Shanghai Stock exchange inside out.


Principles of Investing

In simple terms, investing is making your money work for you – i.e. committing some of your cash in exchange for profit at a later date. For example buying ice cream in the winter and selling it for a higher price in the summer.

But how does one accurately predict future price movements? You could study historical trends and scour the Internet but it can be very time consuming and next to impossible to decipher which information is actually relevant.

Before you begin investing you should consider these 3 interlinking factors:

Risk Attitude

This is your feeling toward putting your cash on the line for an uncertain outcome. Your risk attitude will depend on your personal circumstances but as a rule of thumb, the fewer obligations and the younger you are, the more risk you can take on, as there will be enough time to recover.


How much of your savings or salary are you willing to put up for investing? There may be a good chance of making much better returns than traditional saving but there is no guarantee that you will get any money back at all. But remember “Scared money, don’t make no money”.


Investing is for the long term. Any ideas you may have about making a crazy amount of money in a short period are unrealistic unless you take on a lot of risk and have a lot of money to play with.


Ways to Invest

These days you can invest from the comfort of your home or even on the go.

Here are a 4 ways to whet your appetite in the world of investing:

1. Managed Portfolios

Rather than enrolling on “Learn to Trade” courses advertised on Facebook and Instagram you can let online wealth management companies, also known as Robo Advisors do it for you. These services require you to complete a few questions about your goals and your attitude to risk. Based on this an algorithm allocates your money into a portfolio and gives you a range of how much money you could make throughout the investment term.



  • User friendly – the interface and language used is easy and simple to understand plus you are able to check on your investments 24/7
  • Can be used to fulfil yearly ISA entitlement therefore making your returns tax free
  • Pricing – much lower fees when compared to DIY investing


  • Your money is locked in for a set period of time. Early withdrawals may incur costs which will increase depending on how soon you need your money
  • Ability to check your investment everyday – this can also be a con! If you see your money decrease your instinct will tell you to withdraw or to reduce your risk, but this is the game with investing. You have to resist knee jerk reactions and just ride the wave. Long-term mind-set is key.

Leaders in this space are:


2. Peer to Peer (P2P)

P2P lending platforms work by bringing together and matching up those willing to lend money (i.e. invest) with those looking to borrow. The advantage of these platforms over a traditional bank is that both sets of parties benefit i.e. Lenders get a better return and the borrowers pay less in interest. However there is a minimum investment term, which varies depending on the platform you use.



  • Better interest rates than traditional savings accounts
  • Ability to diversify your lending, from property to sustainable energy projects
  • You can invest tax free by using your ISA entitlement


  • Your money is locked in for a set period of time; withdrawals within that period will incur a fee.
  • Your money may not be instantly lent out. Depending on the platform used, this could delay when your money starts earning interest.
  • Although regulated, P2P is not covered by the FSCS scheme (government scheme where you would be compensated if the banks go bust). But it’s unlikely you’d lose all of your investment since the platforms have a reserve to cover borrower defaults

Leaders in this space are:

Honourable mention for Crowdfunding Investing if you fancy yourself as a Dragons Den investor. Crowdfunding platforms allow you to invest in start-ups across multiple industries from food & drink to technology. As these start-ups grows, so will the value of your investment so by the time they 'exit' your shares will be worth much more than your original investment. Plus you get some good freebies depending on your investment level. Check out Crowdcube & Seedrs.

3. Financial Spread Betting


This is being able to ‘bet’ on the outcome of a particular market/company without having to purchase the actual share e.g. “betting” that Pepsi’s share price will increase or decrease rather than actually buying a Pepsi share.

The important concept about Spread betting is that it is leveraged; this means you only have to place a small deposit for a large exposure (typically ranges between 1% & 10% of your total potential gain). But this goes either way, not only will there be significant gains, but also significant risks. So you can in effect, lose more than your initial deposit if the market goes against you.

For example, if Pepsi’s share price is 200p and you think it will increase in a week and therefore put a stake of £1 for each penny movement. If after 1 week the share price is 230p then your profit would be 30 x £1 = £30. If it actually falls to 170p then you would have made a loss of £30. The maximum deposit you would have put in would have been £3 so you can see how it works from such a small deposit.


  • Tax Free
  • Potentially massive returns on low investments due to leverage
  • Able to practice with the free demo version before using your own money


  • Can be highly addictive

4. DIY Investing

The two main ways of doing this is through Shares (owning a small piece of a firm) and Bonds (a firm borrows your money and pays you interest).

You can pick individual companies to invest in based on personal sentiment or news. If your employer has any share scheme, I’d advise you to take this up as you get access to the shares at a lower price. Investing in only one company is quite risky since your investment portfolio will be sensitive to anything that happens to that single company and its industry.

So it is important to diversify by investing in firms from different industries, a fund or an Index e.g. FTSE 100. The FTSE increases or decreases based on all the companies in the index, so by investing in the FTSE you are effectively investing in all those companies thus mitigating your risk level.


  • Complete control
  • Learning something new


  • Fees can be quite high
  • Large quantity of time to research may be necessary

Leaders in this space are:


Next Steps

And there you have it. As you can imagine, there are quite a few options for you to sample. Whichever stage you are at with investing here are 5 tips for you:

  1. Get your debts under control first. In many cases the interest on debt will far exceed the returns you could make on any investment so it’s important to clear these before they spiral out of control
  2. The greater the return, the more risk you’ll have to accept. Be honest with yourself and avoid investing money that you may need in an unforeseen emergency or really quickly
  3. Don’t panic. Remember that your investment may rise and fall, so be patient. It’s a marathon not a sprint.
  4. Beware of investment and trading courses/schemes. Most but not all are scams as they lure you in with extortionate packages which are pretty worthless. Do your research and make the call for yourself.
  5. If you haven’t got enough for the initial deposit to start investing, think about pooling your money together with your friends and family.

Get a head start and check out some of those platforms today. You work hard for your money, so its time for your money to work hard for you.



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