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THE RISK AND REWARD OF INVESTING.
This is me, Jane, 32. Investing novice. Budding entrepreneur.
i have a hobby that takes up a lot of my spare time. I make chutney in the evenings and
weekends. I sell to a few local places, and my Red Pepper and Tomato chutney is really
popular!
I've been thinking about leaving my job and starting a business to do it full-time. But rather
than put all my money into the business, I'd like to invest some, in case I need it in the long
run.
So friends suggested that I speak to a financial adviser, as I haven't had much experience in
investing before. And I'm really glad I did, because the first thing I learned about was the
risks and rewards of investing. And that it's really important that I understand how I feel
about risk. Just like starting my own business, really.
Different investments carry different levels of risk. So with your money in a bank account
there's almost no risk, but the interest, the reward, is quite low.
On the other hand, investing your money in a single company's shares is high risk. If
something bad happens to the company, you could lose all your money. However, if the
company does well you could potentially make a large gain. And that's the plan for my
chutney business!
There are many different risks that affect investments. A country could suffer political
upheaval, financial troubles, or a natural disaster which weakens its markets.
Things like inflation and changing interest rates could affect my investments too. The Bank
of England sets the base rate that influences banks and building societies' interest rates.
This then get passed on to me, like the interest rate on the loan I'm going to need to start my
chutney business.
Apparently the more money you want in return, the higher your risk of losing your cash. I
don't want to risk everything to get to my goals.
I know my investment portfolio has to have the right mix of risk and reward, so it make sense
for me to spread my money over a number of investments.
Some people think making chutney is complicated, but once you find out all about, it's not at
all. I've found the same with investing.
Would you like to know more about investing? Visit
www.legalandgeneral.com/learnaboutinvesting.