Investments
Many people either get a lump sum to invest at some point in life or simply decide that they wish to put money aside each month to save up for something special in the future. Perhaps they’ve inherited a windfall, taken tax-free sum from a pension or want to save for a wedding or a house deposit. We have put together this guide to the most common types of investments with an overview of each one and including other key considerations.

What are investments?
1. cash – the savings you put in a bank or building society account
2. fixed interest securities (also called bonds) – you loan your money to a company or government
3. shares – you buy a stake in a company
4. property – you invest in a physical building, whether commercial or residential
Types of Investments
Flexible ISAs
New Stocks and shares NISAs
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General Investment Accounts
You can invest in a wide range of funds, shares, investment trusts and exchange traded funds (ETFs) and there are no restrictions as to when you can take your money out.
Unit Trusts and Open-Ended Investment Companies (OEICs)
Investment bonds
Structured Products, Deposits and Investments
Fixed interest securities
Art, fine wine and other collectibles as investments
Investing in shares
Tracker funds and exchange traded funds
When should you start investing?
The right savings or investments for you will depend on how happy you are taking risks and on your current finances and future goals.
Returns
With an instant access cash account you can withdraw money whenever you like and it’s generally a secure investment. The same money put into fixed interest securities, shares or property is likely to go up and down in value but should grow more over the longer term, although each is likely to grow by different amounts.
There’s no guarantee of how your investment will perform. In the case of company shares, it depends on the company’s performance and the economic outlook. With funds, the chance of losing your money or making a big profit depends on the mix of different investments in the fund.
A way to spread your risks is to choose a range of different ‘asset classes’ for example, choosing a fund that invests in a mix of cash, shares, bonds and property, or investing in several funds each investing in a different one of these asset classes.
Risks
You’re always taking on some risk when you invest, but the amount varies between different types of investment.
The money you place in secure deposits such as savings accounts risks losing value in real terms (buying power) over time because the interest rate paid won’t always keep up with rising prices (inflation).
On the other hand, Index-linked investments that follow the rate of inflation don’t always follow market interest rates – and if inflation falls you could earn less in interest than you expected.
Stock market investments may beat inflation and interest rates over time, but you run the risk that prices may be low at the time you need to sell – this could result in a poor return or, if prices are lower than when you bought, losing money
When you start investing, it’s usually a good idea to spread your risk by putting your money into a number of different products and asset classes. That way, if one investment doesn’t work out as you hope, you’ve still got your others to fall back on. This is called ‘diversifying’. Find out more in our guide below.