Homework saves the day!

At the point where you are just getting to grips with financial life it might seem as though the world of stock market investments, bulls, bears, bonds and pension funds are a million miles away. For most people our age, they are. Nest eggs are more the sort of things that people contemplating retirement might concern themselves with. Unless, of course, they’re actually planning a career in the city. But the weird thing is that the world of trading stocks, shares and currencies has never been closer or more important to people of our generation.

Like all good stories this one has a beginning way back in the mists of time, or at least the 1980s. That was when share dealing was largely deregulated under the governments of Margaret Thatcher and John Major so that every man and woman could enjoy the benefits of share dealing that previously had been restricted to the very rich. Throw in the development of digital technologies and social media in the Noughties and the story begins to pick up pace. Not only can you invest in stocks and shares directly through your bank these days, you can even hoover up the insight of the experts and dabble in the markets just for fun.

Changing times

As a way to save for the long term or even to speculate over a shorter span, stocks and shares and currency trades have always offered the potential for a serious rate of return. And with bank interest rates so low as to make saving in the traditional way wholly inefficient more active investment vehicles are now becoming increasingly popular.

It goes without saying that there is an element of risk attached to taking your savings away from the high street. However, the age-old logic of the marketplace is that where there is risk there is also the scope for profit. Whether or not you choose to read on is a matter of how brave you are.

Different timescales

As well as different levels of risk, there are also different timescales to factor into your planning. You will get a better interest rate if you can commit to tucking your money away for a period of years – but that is hardly going to be very convenient in the short term!

At the other end of the scale, there is a means to trade on the movements of stocks and shares on a minute-by-minute basis. Financial Spread Betting as provided by specialist online providers allow you to buy and sell on a second-by-second basis, just as a professional trader would do.

For example, the Tradefair website and apps give 24 hour access to more than 3,800 different markets around the world. It means that you are not constrained by your daytime activities if you want to explore the quicksilver profit potential of market volatility. Given the current global uncertainty it is perhaps worth noting that it is possible to back markets to fall as well as to rise.

But with that minute-by-minute uncertainty comes a degree of inbuilt risk. In a previous article we have noted the fine line that separates gambling from investment. FSB sits right on that balancing point.

Do your homework

There is no getting away from it. At the end of the day, you have to do your homework and that is even more truthful for what you do with your money than it is at college. You don’t lose your cash if you hand an essay in late!

The good news is that there is an entire industry out there that is intended to make it easy for you to understand what is available. There are government regulations that determine what companies can and cannot promise you, and there are armies of staff whose job it is to explain how different financial products actually work. Don’t be afraid to talk to them, they don’t bite! In the same vein, there are plenty of resources online that can inform your thinking, whether that is money saving sites, or the demo versions of actual products.

You might not believe it, but it doesn’t take much effort to learn how to go about putting your spare cash to work. In some cases, depending on how brave you are, it can not only be profitable, it can even be fun!

Photograph by B Gilliard

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