Finance is an important topic. Regardless of whether you’re only interested in the money you earn or you’re someone that values tax-efficient savings schemes and investments, financial affairs are an integral part of life. However, for all the importance money has, very few Brits go beyond the basics. For the purposes of this discussion, we’ll say that the basics are a current account. According to data from the Office of National Statistics (ONS), 94% of people in Britain had a current account in 2018 (the last time data was collected).
In contrast, just 12% owned shares. A further 7% had shares through their employer and 46% had an Individual Savings Account (ISA). But, of those that had an ISA, only 12% had a stocks and shares product. Thus, what we can see here is that, on the whole, Brits tend to keep the money within easy reach i.e. in an instant access current account. That’s not necessarily a bad thing. Storing money somewhere is important. However, if you look at some of the interest rates offered by banks, the best you’re going to get is around 2%, and that’s only for a limited period and/or on small amounts of money.
Shares Offer an Opportunity to Beat the Banks
For comparison, let’s take shares in Amazon. Although the annual return on investment is never guaranteed to be positive or stable, Amazon has consistently given shareholders a profit since 2005. Indeed, if we take the first quarter of 2021, Amazon shares had an ROI of 23%. Fast-forward to Q3 and it was 18.98%. As you can see, these potential returns are significantly more than a current account. Of course, this doesn’t mean you should rush out and buy shares. However, the data does suggest that the majority of Brits are missing out on an opportunity to increase their wealth because they’re not investing.
The good news is that investing is easier than it’s ever been. A complete novice can now go online and learn how to buy shares with simple breakdowns that walk you through the entire process. Starting with the reasons why shares can be a good investment, to rules regarding who can legally own them, these guides are a great way to get started. Then, from there, you can use online or mobile apps to invest amounts that suit you. Indeed, you might only have a few Euros spare at the end of each month. That doesn’t matter.
Invest in Ways the Suit You
Modern investment apps have monthly charges of just £3 and, importantly, they allow you to buy fractional shares. This means you’re buying a small percentage of a share, rather than paying full price. These features are not only designed to make investing more affordable, but they’re also a way for novices to enter the market with a limited budget. Again, the fact it’s easier to buy shares now than it was 30 years ago doesn’t mean you should. However, we know that only a minority of people in Britain own shares. We also know that, if you make sound investments, the money you can make is far greater than you’ll get from a current account.
So, if you go by the facts, buying shares can be a shrewd move. As long as you invest in a way that suits your circumstances and you don’t spend more than you can afford, there are opportunities aplenty. You might not be a financial wizard or particularly interested in the various money-saving products out there. What you probably do care about though is your money. So, if you can take advantage of ways to make it work for you and, potentially, improve your financial status, it’s worth looking a stocks and shares.
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